Second continuing resolution appears likely

Raleigh, N.C. — A week into the 2009-10 fiscal year, lawmakers are no closer to a new state budget than they were when they began negotiating two weeks ago.

House and Senate budget-writers said they can't agree on basic things – where to spend, what to cut and how to raise revenue – and they said it's unlikely a spending plan will be passed before the continuing resolution that is keeping state government running expires next Wednesday.

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Lawmakers at impasse over state budget

"There's not a lot of conversation going on," Senate Majority Leader Tony Rand said.

"There is a major gap in education, public safety and human services," Senate President Pro Tempore Marc Basnight said.

The House sent a proposal to the Senate but hasn't responded to the counter-offer that was made last week.

"The proposal they gave us was not acceptable," said Rep. Mickey Michaux, D-Durham, noting that many House members don't believe the Senate's plan was an honest effort at compromise.

"It was a bit frustrating, but that goes with the territory," Michaux said.

Gov. Beverly Perdue tried to break the impasse Tuesday by calling top lawmakers to the Executive Mansion and laying out her own plan for raising extra revenue in the coming year to erase a projected $4.6 billion deficit.

Perdue called for raising the state sales tax by a penny for 13 months, beginning Sept. 1. The increase would raise more than half of the $1.6 billion in revenue she would like to include in the 2009-10 budget.

Her plan also would enact taxes on a range of services like appliance installations and repairs, movie tickets, courier services and cosmetic surgery; raise taxes on cigarettes by 50 cents per pack and on alcohol; lower personal and corporate income tax rates; and provide tax relief to home buyers and small-business owners.

Lawmakers said their plans call for raising an extra $1 billion in revenue.

"She does not want any expansion of class size (in public schools). I believe that should occur," said Basnight, D-Dare.

Perdue said she hopes her budget plan will motivate the General Assembly to reach consensus and raise more taxes, but she wouldn't commit to signing a budget with less new revenue than she has targeted.

"As they deliberate, I hope people across the state will hold their feet to the fire and (get them to) make the right decision for kids and schools," she said.

Budget negotiators said they are feeling pressure from constituents who want them to raise revenue but also operate more efficiently.

"Folks back home don't feel like we've tightened our belts, that we've not reduced our budget, that we're not spending money as wisely as we should, and that should be our first priority," said Sen. Linda Garrou, D-Forsyth.