State News

N.C. Senate Tentatively OKs Budget

Posted May 30, 2007 2:31 p.m. EDT
Updated May 30, 2007 9:21 p.m. EDT

— The state Senate on Wednesday tentatively approved a two-year spending proposal that would let a pair of "temporary" taxes expire and would include other provisions backed by Republicans.

For the first time in years, a majority of GOP members joined the Democrats who control the chamber in backing the budget, a $20 billion spending plan for the fiscal year starting July 1.

"I don't think it's a perfect budget," Senate Republican Leader Phil Berger said before the bill was passed 47-2. "On balance, it's the best budget I've seen."

Republican Sens. Andrew Brock of Davie County and Eddie Goodall of Union County were the only senators to vote against the budget. Another senator was absent.

Under the plan, the state would borrow more than $1 billion, largely for a host of education projects that Democratic leaders say are necessary to help train workers and to build research facilities to create high-tech jobs.

It contains no requirement that voters approve the borrowing, which Gov. Mike Easley and State Treasurer Richard Moore would prefer and which would also reduce the interest paid on the debt.

Senate leaders contend borrowing remains cheap, however, and argue that the projects are too important to wait for a vote.

The budget proposal would roll back the state sales tax and the top income tax bracket to pre-2001 levels and would cap the state gasoline tax.

A final Senate vote was expected Thursday.

Meanwhile, a new plan circulating in the General Assembly would lift the Medicaid burden of more than $500 million from local government. To do that, the state would have to take over some local tax revenues.

The move would help rural counties with high Medicaid bills. Metropolitan counties like Wake County could lose money in the deal, but state leaders promise to make up the difference.

"The state believes and we believe that this should be a state responsibility. They are committing to relieve the counties of this burden so they can take care of their local infrastructure needs locally," said Paul Meyer, assistant general counsel for the North Carolina Association of County Commissioners.

As part of the deal, local governments would be given the option to levy new taxes on everything from land transfers to car rentals.