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State Budget Clears Final Hurdle

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RALEIGH — Though it is 83 days late, North Carolina finally has a budget for the current fiscal year. The $14.5 billion spending plan passed the House and Senate Friday. It does include some tax hikes, and the state schools for the deaf and Dorothea Dix Mental Hospital will remain open for now.

The budget contains the largest income tax increase in the country. But it also provides the money that is needed to continue to improve education, and is a spending plan that factors in the winners and losers based on the battles won and lost.

Lawmakers intended to keep education the top priority. And they did.

"We did a tremendous amount in raising teachers salaries and reducing class size in kindergarten, new programs for at risk children, the enrollment increases at all of our public schools and universities and community colleges," said Rep. David Redwine, D-Brunswick County.

Gov. Mike Easley can chalk up a big win for his education initiatives. But he lost the battle for a full one-penny tax increase. A determined group of Democrats and Republicans blocked the higher tax.

"I feel good that the budget package did not do that. It does not put the burden of increased revenues squarely and solely on the backs of the working families of the state," Rep. Dan Blue, D- Wake County, said.

The half-cent tax increase will will cost most taxpayers about a dollar a week.

If you are wealthy, prepare to pay higher taxes on your income and the luxury cars you buy. Satellite television, long-distance phone calls and liquor sales will all carry higher taxes.

Pay raises for state employees and teachers will be wiped out by a 30 percent jump in health care insurance premiums.

Modest tax breaks are headed to married couples and parents with children.

Independent tax analyst Dan Gerlach has a favorite or two.

"They closed a lot of loopholes. Closed 96 percent of the tax loopholes that the commission on which I served for Governor Easley recommended. So if I can get 96 percent of what I recommended done all the time, I think North Carolina would be a much better state, but I'll take it when I can get it," Gerlach said.

Easley says he will sign the budget bill into law.


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