Lawmakers pass $19B state budget

The spending plan, which is more than a month overdue, now goes to Gov. Beverly Perdue. She said Tuesday night that she would sign it into law, despite some misgivings.

The Senate passed the final reading of the budget by a 27-18 vote, and the House followed a short time later with a 65-52 vote.

The budget was due July 1, but differences over spending priorities, where to cut and how to raise new revenue to erase a projected $4.6 billion deficit created an impasse between the two chambers.

The two sides negotiated on and off for weeks before agreeing to a tax plan last Thursday – an earlier version collapsed after Perdue objected to it – and then to spending decisions on Friday.

Perdue expressed concern over cuts to mental health services and said the budget doesn't provide enough funds for public safety or additional monetary help for working families, such as an increase in the earned income tax credit.

Republicans criticized the plan as too long on taxes and too short on spending cuts. Sen. Bob Rucho, R-Mecklenburg, said the state is quickly becoming known as "North Taxolina."

The budget proposal includes a one-cent increase in the state sales tax rate, raising it to 7.75 cents in most locations. It also would impose a 2 to 3 percent surcharge on the income tax liability owed by individuals with a state taxable income of $60,000 or more and couples with a state taxable income of $100,000 or more.

Taxes on tobacco and alcohol also would be raised, and the state would claim a bigger share of alcohol taxes, holding onto some money previously distributed to municipalities.

On the spending side, lawmakers agreed to preserve class sizes – and hundreds of teaching jobs – in kindergarten through the third grade. Districts will have flexibility in reducing spending, but the budget directs schools to preserve the classroom as much as possible in grades 4 through 12.

About 725 state workers will lose their jobs under the budget, and another 1,318 vacant positions will be eliminated. But the plan spares other state employees from pay cuts and furloughs.

The job losses are in addition to any teaching jobs that were cut by school districts statewide.

The budget proposal cuts the Department of Health and Human Services budget by 29 percent and cuts education spending by almost 10 percent.