Easley Signs Budget Into Law At Raleigh School

Students watched from the balcony as Easley told how the budget would reduce class size, include a pre-kindergarten program for at-risk children, and provide a teacher's expense account and pay raise.

"That's why it is so important that we continue to make the investment because what you see in the balcony are our future doctors and lawyers, firefighters and police officers and maybe a few legislators up there," Easley said.

The budget includes $1 billion in tax increases which will include luxury cars, liquor, and satellite bills. Those taxes begin Oct. 1.

A half-cent sales tax increase begins Oct. 16.

The Republicans will likely use the tax hikes against the Democrats in next year's election.

"I hope they do, because I'll take them on with that. There are so many good things in this budget. We closed loopholes, we kept taxes from going up to the very smallest amount we could, and we funded the things we had to fund to keep the state running," Rep. Bob Hensley D- Wake County said.

"Every poll we saw said 'do not raise taxes.' In spite of that, the Democrats had to raise taxes. They will hear from us about that later on next year," Rep. Leo Daughtry, R- Johnston County said.

The state university system will be able to handle record enrollment increases as well as improve student financial aid.

"And I report to you this morning that we have far exceeded that 5,400 additional students and are now exceeding 7,100 more students studying in our university this fall than last fall," said University of North Carolina System President Molly Broad.

Easley did not get everything he wanted in the budget. He had pushed hard for a lottery, which did not make it. However, the lottery may not be dead this year just yet. There is a scheduled hearing for Oct. 1 to hold a referendum on the lottery.