RALEIGH, N.C. — State lawmakers are listening to Gov. Mike Easley's recommendations for the 2004-05 state budget.

Easley is calling for $700 million in new spending for the next fiscal year. To do that, he plans to take money from tax collections and the budget surplus and unspent money from the current fiscal year. He is also talking about using $350 million in cuts this year.

In his proposed budget, Easley would provide a 2 percent pay raise for state workers, plus a $250 one-time bonus, which is less than the 5 percent requested. Community college professors would also receive a 4 percent pay raise under Easley's plan.

Most legislators seemed warm to some of the ideas in Easley's budget proposal.

"Certainly, a major battleground issue would be compensation for teachers and state employees," said Rep. Joe Hackney, D-Orange. "We are trying to recruit teachers. We are way behind for teacher recruitment for the years ahead. We need to move ahead with teachers' compensation. Our state employees have been without raises for some time."

"I think the major battleground will be the question about whether taxpayers will be asked to give big tax breaks to the giant corporations to the exclusion of small business," said Rep. Paul Stam, R-Wake.

Health advocates also made their way to the state Legislature Monday with a proposal to raising the cigarette tax from 5 cents a pack to 75 cents a pack. Advocates claim the higher tax will help reduce smoking and pay for health care costs now covered by taxpayers.

During the short session, state lawmakers are also expected to discuss projects such as multimillion-dollar medical research facilities at University of North Carolina campuses that would be funded through bond money.