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New NC Budget Proposal May Narrow Differences Between Democrats, Republicans

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RALEIGH — When parents and students buy their back-to-school supplies next August, they can shop till they drop -- and pay no state sales tax.

A three-day sales tax holiday in the early days of August has been added to a house tax package designed to fix a $1 billion budget hole. The tax holiday idea united Democrats and Republicans, who are usually at each others throats on whether to raise taxes or cut the budget.

Raleigh Republican Art Pope is targeting university overhead receipts.

"They spent $17,000 on pizza to try to attract students to meet with their professors in afternoon sessions. So don't tell me there's no waste in the state government budget," said Pope.

Republicans responded to Gov. Easley's tax plan last week, suggesting a 3 percent budget cut in every agency rather than raising taxes.

House Speaker Jim Black weighed in with a feisty response.

"When President Bush is praising us with moving forward, we're going to take $250 million out of the education budget? I don't think so," said Black.

Black pushed his revised tax plan, which includes some of what the Governor and the Senate demand:

  • Add 1 percent to the sales tax, with 1/2 cent going to local governments, who in return give up state reimbursements.
  • Increase the income tax on the wealthy, but only by .25 percent.
  • Reward low-income families with an income tax credit.
  • Eliminate the $1,500 tax cap on new cars.
  • Tax HMOs
  • Expand the children's tax credit.
  • Eliminate the marriage penalty.
  • Under the plan proposed Thursday, the sales tax increases will expire in three years, when the economy should be on the rebound.

    The Democrats package passed the House tax committee Thursday afternoon and full house debate is set for next week. There is still no guarantee that it will pass the full house, where the Democrats hold a slim majority and Republicans still plan to fight the increase in taxes.


    Fred Taylor, Reporter
    Terry Cantrell, Photographer
    Julian King, Web Editor

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