N.C. budget remains in doubt after pay change fizzles

By: - August 10, 2005 5:01 am

Hendersonville News

Associated Press Writer

The House tentatively approved a final $17.2 billion budget proposal for this year by the narrowest of margins Tuesday night, but its future remained shaky after an apparent deal to increase state employee salaries by a larger amount fizzled.

By a vote of 60-59, the House agreed to its two-year budget compromise with the Senate. But the House and Senate put off plans to hold more required votes on the budget just after midnight.

Freshman Rep. Linda Coleman, D-Wake, had said after the vote that House and Senate leaders won her budget support by agreeing to pay raises for rank-and-file state employees of 2 percent or $1,000, whichever is greater, instead of 2 percent or $850.

The additional $150 would have been approved in a separate bill later.

But House Majority Leader Joe Hackney confirmed late Tuesday night that Senate Democrats no longer supported the higher raise. "They had a caucus about it," said Hackney, D-Orange.

House and Senate leaders adjourned shortly after 11 p.m. until Wednesday afternoon.

Kevin LeCount with the State Employees Association of North Carolina said several Democrats had voted for the budget believing that a pay-raise deal had been struck.

"The Senate has rescinded the deal," said LeCount, SEANC’s political director.

Senate Majority Leader Tony Rand, D-Cumberland, disagreed with that account. "I’m not aware of any deal," he said.

The delay could crimp legislators’ hopes to adjourn for the year by this weekend.

The dispute is problematic for the House, where Democrats hold 63 votes and none of the 57 Republicans voted for the budget. Senate Democrats have a comfortable 29-21 advantage in their chamber.

House Speaker Jim Black, D-Mecklenburg, has spent the past few weeks trying to hold his caucus together by negotiating a budget that would satisfy nearly everyone.

Two Democrats voted against the budget, said Rep. Bill Faison, D-Orange, who identified himself and Rep. Grier Martin of Wake County as the two who voted no. One Democrat, Rep. Paul Luebke of Durham County, was absent.

The proposed budget generates more than $600 million in new or extended taxes this coming year, including a cigarette tax that would increase from 5 cents per pack to 30 cents a pack on Sept. 1. It would jump to 35 cents next summer.

The budget also keeps in place for another two years a half-cent increase in the sales tax and an 8.25 percent income tax rate for the top wage earners. Both were set to expire this year after first going on the books in 2001. There’s also higher driver’s license and title fees, and higher taxes on candy, liquor and satellite television.

In a debate that lasted only 15 minutes, the Democratic and Republican House floor leaders spoke for or against the spending plan.

Hackney said the budget compromise restored many of the onerous Medicaid and education proposals from the House and Senate budgets.

Thanks to a revenue surplus last fiscal year of $681 million, budget negotiators were able to set aside $324 million in reserves and for repairs and renovations of state properties.

"We need to say this budget moves North Carolina forward," Hackney said. "It moves us forward in education, it moves us forward in economic development … it is really good for the citizens of North Carolina."

Republican Leader Joe Kiser, R-Lincoln, said Democrats raised taxes while failing to get a handle on spending. The measure also contains a lot of special provisions that send money to Democrats’ home districts, Republicans argued.

"This budget is full of pork, page after page after page," Kiser said. He cited a proposed increase in a newborn testing fee and the elimination of a cap of funeral expenses.

"We have taxed and (placed fees on) people from the cradle to the grave," Kiser said.

Faison said he voted against the bill because he promised during his campaign to oppose a higher cigarette tax. "When you look at people and you make a commitment … you fulfill a commitment," he said.

Democrats counter that they had to keep some temporary taxes in place to continue to improve the public schools and pay for the growing costs of health care and building roads. They also said they tried to keep growth of Medicaid expenses in check by freezing provider rates.

Easley also insisted that this year’s budget would remain below a self-imposed spending cap. The cap would limit spending from last year’s budget to increase by no more than 5.6 percent. Easley would be asked to sign any budget bill into law.

Overall education spending this year would be $72.1 million less than what Easley sought in his budget request. Health and Human Services also would receive $55 million less than what Easley wanted.

Teachers would receive an average pay increase of 2.24 percent, while community college instructors also would receive an additional 2 percent beyond what state employees receive.

A provision inserted in the final budget but in neither the House nor Senate proposals would raise salaries by about 10 percent for about two dozen workers in the Division of Coastal Management.

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Chris Fitzsimon

Chris Fitzsimon, Founder and Executive Director of N.C. Policy Watch, writes the Fitzsimon File, delivers a radio commentary broadcast on WRAL-FM and hosts "News and Views," a weekly radio news magazine that airs on multiple stations across North Carolina. [email protected] 919-861-2066