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RALEIGH — A key House committee approved $783.6 million in tax increases after 14 hours of start-and-stop meetings Tuesday, taking a major step in the effort to bridge a more than $4 billion budget gap.

The House Finance Committee agreed to raise sales, income and other taxes shortly after 10 p.m., while colleagues on the Appropriations Committee continued to meet past 11 p.m. Both groups began work at 8:30 a.m. Tuesday and planned to return this morning.

The House faces a July 1 deadline to broker a final budget deal with the Senate and Gov. Bev Perdue . But before those negotiations can begin, House members must agree on a budget bill that would both balance the state books and pass the chamber.

“I think we realize we’ve got to get something done,” said Rep. Pricey Harrison , a Greensboro Democrat.

While the General Assembly has regularly blown past its deadline over the past decade, doing so would be more costly and complicated this year.

Republican lawmakers have largely refused to cooperate with Democratic House leaders in crafting a budget, complaining the proposals laid out Tuesday rely on raising taxes when they should be focused on cutting government spending.

“The House budget is a fraud,” said Rep. Paul “Skip” Stam , an Apex Republican and his party’s leader in the chamber. He said that Democrats had overstated budget problems and did not properly account for federal stimulus dollars.

Without help from the GOP, Democratic leaders were forced to find consensus among their 68  members, which was no simple feat. And even after last night’s breakthrough on taxes, they still face the prospect of stitching together two disjointed revenue and spending proposals.

Virtually all Democrats agree they needed to roll back budget cuts that would create more crowded public school classrooms, eliminate certain health programs for the poor and hurt public safety programs. But they began the day Tuesday divided on how to raise the money to restore those programs.

Rep. Earl Jones  embodied that conflict — calling for more revenue but opposing specific taxes.

“We need to get as close to $2 billion as possible,” said the Greensboro Democrat, calling for a total tax package double what his colleagues ultimately settled upon. He said the state needed to spend more to protect vulnerable populations and stimulate the economy.

But Jones joined with Kinston Democrat Van Braxton  in opposing a $122 million rise in tobacco taxes outlined in a bill presented early Tuesday morning. Joining with all of the House Finance Committee Republicans, Jones, Braxton and two other Democrats helped defeat the tax.

“This was a bad tax. Tobacco is a legal product in North Carolina....I hope we can find some other area of revenue to make the difference,” Jones said, noting that the tax hike would hurt companies such as Lorillard, a Greensboro-based cigarette maker.

The committee also cut another $31.4 million in beer and wine tax increases shortly before passing the bill. However, a tax on liquor would be raised.

Also left intact were two key tax increases:

l the creation of two new upper-end income taxes rates.

lan increase to the sales tax by a quarter-cent to 7 percent in most places throughout the state.

Sales taxes also would be applied to more items, including warranties and installation of large home appliances.

Republicans on the Finance Committee did their best to strip out pieces of the tax measure.

Rep. Julia Howard , a Mocksville Republican, made a bid to eliminate sales taxes on auto repair services.

“When we put an extra burden on and it’s a deterrent for people to do simple things like oil changes, you’re going to see smog and smoke and things harmful to the environment,” Howard said.

Staff members estimated that cutting the tax would cost the budget at least $70 million. That, said Democrats, would curtail the legislature’s ability to restore certain education, health and other programs.

The committee defeated the amendment with a 12-16 vote.

It was one of several Republican amendments to meet with defeat as the night wore on. Members of the GOP argued that working families would be most hurt by the tax increases. Additionally, they said businesses would be hurt and new businesses would be discouraged from moving to the state.

But Democrats said they were merely trying to spread the burden equally.

“It becomes, in terms of the package, a matter of fairness,” said Rep. Paul Luebke , a Durham Democrat. “It’s asking those in the business community to contribute as well toward the well-being of our state.”

When asked about Republican criticism of the budget proposals, Speaker Joe Hackney , a Chapel Hill Democrat, said that GOP members had voted against budget cuts approved last week and were now standing in the way of raising revenue to blunt the effect of those cuts.

“They just refuse to do their constitutional duty to balance the budget....If you won’t cut and you won’t tax, what is your position?” Hackney said.

Contact Mark Binker at (919) 832-5549 or mark.binker@news-record.com.