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N.C. House wants to see key tax figures for budget

Thursday, April 9, 2009
(Updated 8:59 pm)

RALEIGH (AP) — House leaders accepted cautiously Thursday the Senate's proposed North Carolina state government budget, worried whether they'll ultimately need to make more cuts or raise more taxes than their counterparts.

In any event, the House's chief budget-writers predicted they'll make some significant changes in the Senate plan when they unveil their version later this spring.

"It leaves a lot to be desired," said Rep. Mickey Michaux, D-Durham, senior co-chairman of the House Appropriations Committee. "It appears though we're going to have to do some serious realigning of the budget."

The Senate sent its two-year budget over to the House after giving it final approval Thursday morning by a vote of 30-16, a margin similar to the initial OK provided by the chamber Wednesday following a couple hours of debate.

While House members, Gov. Beverly Perdue and education lobbyists weren't pleased with cuts the Senate made in the public schools, the pain could spread if tax revenues at a key deadline next week are worse than expected.

Figures from final and quarterly tax collections due April 15 will be available later in the month. These revenues are usually the most volatile of the fiscal year. The numbers could affect the current year's budget shortfall and, in turn, adjust revenue projections for the next two years necessary to fashion the budget.

"It's early in the session. We do not have April 15 numbers. I just don't think that the most fundamental budget decisions have yet been made," said House Speaker Joe Hackney, D-Orange. "It's apparent the general public does not yet realize the kind of cuts that may ultimately be necessary."

The Senate's plan would spend $20.05 billion in the fiscal year starting July 1, closing an estimated $3.4 billion budget gap by $1.1 billion in spending cuts, $1.7 billion in federal stimulus money and nearly $600 million in higher taxes and fees.

But the budget included a line item that sets aside $500 million for future tax adjustments that weren't detailed in the bill, causing most Senate Republicans to vote against the measure.

Lower-than-expected revenue numbers could mean the House would have to fill a larger budget hole, possibly with more taxes or deeper cuts.

"We're not sure whether $500 million is the correct figure or not," said Rep. Paul Luebke, D-Durham, senior co-chairman of the House Finance Committee. "The fear is the amount required might go up."

The Senate plan would reduce spending for K-12 schools more deeply than what Perdue, another Democrat, sought in her budget proposal released three weeks ago and shifted more money to the community college and University of North Carolina systems.

Michaux said he didn't care for the extent of the public school reductions and questioned a nearly 25 percent reduction in money for the More at Four prekindergarten program. The Senate would merge the program with an initiative that sets ratings for child care programs.

But he praised some Senate provisions, including one that would suspend annual teacher bonuses and allow state agencies to furlough workers as a cost-cutting measure. Perdue hasn't supported furloughs.

He also said the House would consider a Senate proposal to increase by two students the average classroom size in the public schools, saving the state $322 million annually.

Perdue and the North Carolina Association of Educators are strongly opposed to the idea because they said it could put more than 6,000 teachers out of work. But Michaux said most of the reductions would be made through attrition and not involve teacher layoffs.

"It's not really going to hurt anybody," Michaux said.

House Democrats, which have a 68-52 advantage over Republicans in the House, didn't have an estimate on when they would roll out their budget plan. Once the House plan is approved, negotiators would then work out a compromise they hope Perdue would sign into law.

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