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N.C. Democrats work out tentative budget agreement

Friday, July 31, 2009
(Updated 9:03 pm)

RALEIGH, N.C. (AP) - House and Senate Democrats completed a tentative budget agreement for the next two years Friday evening, almost a month after a plan to run North Carolina state government was supposed to be in place.

Lawmakers said they had wrapped up their work on a proposal expected to spend roughly $19 billion for the fiscal year that started July 1, not including more than $1 billion in federal stimulus money that would help ease the state's worst fiscal crisis in a generation.

"It's really been a hard year, and that's why it's taken us so long," said Sen. Linda Garrou, D-Forsyth, one of the Senate's top negotiators.

The first of two required votes on the final budget bill in each chamber could come as early as Tuesday. The budget's passage after more than seven weeks of negotiations would signal this year's session is about to end.

The final sticking point worked out publicly stemmed around public school spending cuts, which fellow Democratic Gov. Beverly Perdue demanded needed to minimize damage to classroom operations. Perdue will be asked to sign the budget into law.

The agreement by Democrats controlling both chambers wouldn't require class sizes to increase in kindergarten through sixth grade - meaning districts would get money to hire teachers this fall using the same student-teacher ratio as last year. But the 115 school districts and charter schools would be responsible to find spending cuts in grades 7-12.

The budget proposals approved by the House and Senate each had found spending cuts by increasing the average class size by three students, saving as much as $323 million annually by eliminating money for 6,000 teacher positions.

But those offers were replaced with Friday's final decision.

The level of those spending reductions weren't immediately available Friday night. More details - such as how many hundreds of state positions would be eliminated - would be provided Monday when the budget is finalized and the bill released.

It wasn't immediately clear whether Perdue would support the final product, which would give schools flexibility to use other pots of money to hire as many teachers as possible, such as state money for textbooks.

Perdue administration officials said they didn't know whether Perdue would have a statement Friday night. Rep. Mickey Michaux, D-Durham, the House's chief budget negotiator, said he was worried that Perdue wouldn't like the final package.

"I don't think she's going to like it because it doesn't protect (grades) seven through 12. That may be a problem. If we find more money we can probably work it out."

With the powerful North Carolina Association of Educators as an ally at her side, Perdue had said for weeks she wouldn't accept a budget that damaged the public schools.

"We cannot increase class size. We cannot lay off teachers," Perdue said at a June 17 rally. "We will not sacrifice North Carolina's economic future."

Garrou said she believed only a couple of districts could lose teachers under the proposal. She expected high schools to cut from nonessential services or not teach certain classes that have few interested students this year.

"I can't promise any teacher that they're going to have a job," Garrou said. "This has been an opportunity for (districts) to assess their faculty and which faculty they should keep."

The final agreement also didn't contain a House proposal that would have eliminated funding for teacher assistants in third grade.

Legislative leaders also said late Friday the budget:

- would close seven small or aging prisons, leaving open an eighth threatened with closure in Haywood County. Lawmakers said many correction officers would find work in other nearby prisons.

- would close the Samarkand Youth Development Center for female delinquents in Moore County but keep open the Dobbs Youth Development Center in Lenoir County.

- doesn't touch a program that discounts university athletic and academic scholarships for out-of-state residents, with taxpayers picking up the difference.

The tentative deal comes a day after tax negotiators agreed on a way to raise $990 million in additional taxes and $1.3 billion next year to close the budget gap, which Democrats calculate at $4.7 billion.

The revenue package would raise the sales tax rate by a penny so that most consumers would pay 7.75 percent through mid-2011. An income tax surcharge would be placed upon individuals whose taxable income is as little as $60,000 and all profitable corporations. Cigarette and alcohol excise taxes would go up, although a handful of House Democrats were still trying to find a way this week to block them.

The budget agreement came a few hours after Perdue signed into law a stopgap spending measure - the third since July 1 - that directs state agencies how and what to spend while the final budget is worked out. The previous spending plan was to expire at 11:59 p.m. Friday.

Republicans have complained the budget gap is smaller than Democrats characterized and higher taxes aren't necessary because government has operated without them under the stopgap plan.

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