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State Lawmakers Reach Agreement On Budget

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RALEIGH, N.C. — House and Senate leaders agreed Friday on a budget for the coming year that cuts both sales and income taxes and gives state employees large raises but doesn't address the minimum wage or a landfill moratorium.

The two chambers are expected to vote on the roughly $18.9 billion spending bill next Wednesday and Thursday after a long holiday weekend, said House Speaker Jim Black, D-Mecklenburg.

The new fiscal year begins Saturday, but there's no threat of a government shutdown because a two-year budget was passed last summer. This measure adjusts the second year of that budget.

House and Senate budget leaders had been meeting daily for more than a week trying to pass a budget before Friday. Gov. Mike Easley will be asked to sign the final bill into law.

Under the proposal, state employees would receive a salary increase of 5.5 percent -- more than the 5 percent the Senate and Easley sought. Teachers would receive an average 8 percent raise, while community college faculty and professional staff would get a 6 percent raise, with a 2 percent one-time bonus. University workers would get a 6 percent raise, but $5 million would be given to university chancellors to help recruit and retain professors.

The bill would reduce the state sales tax by a quarter-penny come December and the top individual income tax bracket starting Jan. 1. Small businesses also would receive a $250 credit for each low-income worker for which it pays for health insurance premiums.

The deal also sets aside nearly $23 million to make up for money the state highway fund may lose if the state gas tax is capped, but it wasn't immediately clear whether language to keep the cap at 29.9 cents per gallon would be in the budget or handled separately. Both chambers also agreed to give county governments $27.4 million to keep their Medicaid costs at 2005-06 levels.

Easley also got the money he wanted to supplement poor school districts and for at-risk students. Last week, the two chambers tentatively agreed to provide amounts just short of what the governor sought.

"We did some good things for education," said Senate leader Marc Basnight, D-Dare.

The Senate wanted a budget provision to require an 18-month moratorium on landfill construction. House leaders declined to consider it unless it was in a separate bill, so the provision was pulled, Hagan said.

Rep. Jim Crawford, D-Granville, a budget negotiator, said a moratorium bill will be filed in the House, but Basnight said he doubted it would be approved.

At least five new landfills have been proposed in eastern and central North Carolina, raising concerns among some that trash brought in from other states could contaminate groundwater supplies and harm fragile ecosystems. Garbage-related industries have hired several lobbyists to attempt to block the moratorium.

Leaving out the provision "hurts North Carolina because ... we get more identified with being the trash dump of the East Coast," Basnight said.

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