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RALEIGH — N.C. lawmakers have scrapped a plan to raise $1 billion in new income, sales and sin taxes next year, but don’t count on holding on to that money.

Neither legislative leaders nor Gov. Bev Perdue say they can piece together an expected $18.9 billion budget without raising taxes.

They just can’t agree on how to do it.

Perdue plunged negotiations over the already overdue state budget into uncertainty Thursday when she threatened to veto a tentative tax plan made by legislators Tuesday.

“Yesterday, I saw a proposal that stunned me, quite frankly,” Perdue said. “What it did was propose raising income taxes on working families and the middle class.”

Perdue’s objections came despite having staffers closely monitoring the process, and at times in the room, as House and Senate negotiators hammered out a deal to end a monthlong impasse.

“We’re starting from scratch,” said Sen. Clark Jenkins, a Tarboro Democrat and one of the lead tax negotiators in the Senate.

Perdue is a Democrat, as are the leaders who control the House and Senate. But the governor’s office and the two chambers each have their own priorities that can lead to deep divisions, despite all being in the same party.

Aside from delaying the advent of new taxes, the budget delay also means uncertainty for virtually any public agency that relies on government funding. Public schools, for example, which start their traditional calendar in August, still don’t know how many teachers and administrators they’ll be able to pay next year.

The latest development will likely cause lawmakers to take even longer finishing the budget and probably force them to extend a temporary spending plan well into August. The current deadline is July 31.

“This is the Democrats in the House arguing with the Democrats in the Senate arguing with the Democratic governor,” said Rep. John Blust, a Greensboro Republican. “My question is, who is going to represent the people?”

Blust and other Republicans argue that Democrats could close what they claim is a $4 billion-plus budget shortfall by trimming wasteful spending, properly accounting for federal stimulus funds and diverting funding for some optional programs such as the Clean Water Management Trust Fund.

The GOP is largely locked out of the budget negotiations.

Meanwhile, Democrats have said that a deal on how to spend money can be completed quickly if the much more difficult tax negotiations could be worked out.

In large measure, Perdue objected to a plan that would have added a 2 percent surcharge on all income tax bills. Someone who would have paid $1,000 to the state would have ended up paying $1,020.

As explained by House and Senate budget writers, Perdue has made two demands:

-- Income taxes for individuals who make less than $150,000 and couples who earn less than $250,000 must not rise.

-- Eliminate cuts to the public education budget that would force public schools to increase class size.

Combined, those two items would force budget writers to find either $400 million in new revenue or cuts.

While Senators talked about a wholesale rewrite of the tax plan, House members said they would use their prior agreement as a starting point. In addition to the income tax surcharge, that plan would have raised sales taxes by a penny and raised excise taxes on beer, wine, liquor and cigarettes.

“The governor and her people are part of the process and we try to involve them as we go along,” said Rep. Hugh Holliman, a Lexington Democrat and the House majority leader.

 He and other House lawmakers played down their frustration Thursday. “We certainly try to keep the governor in the loop and would certainly appreciate if she has any problems with the plan that we come up with that she let us know.”

While Democrats have enough votes to pass a budget, they would need help from Republicans to gather the three-fifths majority needed to override a veto.

Tax negotiators for the House and Senate said they would work separately through the weekend and meet again Tuesday.

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