Local Politics

Perdue hopeful for budget agreement

Posted June 26, 2009 5:39 p.m. EDT
Updated June 26, 2009 6:53 p.m. EDT

— With state budget negotiations at a stalemate and lawmakers gone home for the weekend, Gov. Bev Perdue says she's hopeful the General Assembly will reach an agreement soon on how to raise more money.

"We'll have a budget. It may take us 10 days longer than I want it too," she said Friday. "But at the end of the day, it's all going to work out, and we'll have a revenue stream."

Both the state House and Senate have agreed to raise $990 million in revenue in fiscal 2009-10 and $1.3 billion in the second year of the budget. Perdue, in recent days, however, has asked them to generate $1.5 billion to avoid drastic cuts to education.

What she has not said is where that revenue should come from, and lawmakers – who have agreed where to cut the budget to erase a projected $4.6 million deficit – cannot agree on how to raise it.

"We have a philosophical difference," Sen. David Hoyle, co-chairman of the Senate Finance Committee. "I respect my colleagues in the House, but we're where we are. They're where they are, and I intend to stay close to where we are."

The Senate is proposing to lower the state sales tax and to tax more services, such as auto repair, lawn care and home improvement. The House wants to increase sales taxes and raise income taxes on couples making more than $200,000 a year.

Perdue hasn't publicly taken a stand.

"Whether it's one revenue stream or another, I think we're all open to those kinds of discussions," she said. "It is what it is. This is the oldest dance in American history."

Some legislators say the chances of passing a balanced budget by June 30, the end of the fiscal year, are about 50 percent.

Once lawmakers agree on how to generate the money, they then have to decide where it goes. Many say it should go to education and the Department of Health and Human Services, but not everyone agrees with that plan.

The Senate agreed Tuesday to approve a continuing resolution to keep the government operating past the end of June in case a budget isn't in place.

The bill orders Perdue to keep spending levels at no more than 85 percent of what was allocated in the past year's budget, because lawmakers are reducing spending due to declining tax collections.

The temporary spending plan also would prevent any pay increases for state workers, such as automatic step increases, from taking effect unless authorized by the General Assembly.

The House Appropriations Committee passed its own continuing resolution Thursday – House leaders have criticized the Senate bill because it doesn't include any expiration date – but House members say they are more focused on trying to get the budget done on time.