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RALEIGH — N.C. residents will pay more to run their state government but get fewer services in return under the $19 billion budget lawmakers tentatively approved Tuesday.

Voting along party lines, with Democrats in favor, the House voted 65-52 to approve the measure. The Senate vote was 27-17. Both chambers must vote again today to send the deal to Gov. Bev Perdue.

Like those who control the House and Senate, Perdue is a Democrat. But the budget is more than a month overdue because members of the two chambers and the governor could not agree on how to bridge what they described as a $4.5 billion budget gap.

Residents who earn more than $60,000 a year will pay more in income taxes and everyone will pay more in sales taxes. The excise taxes on alcohol and tobacco products also will rise, and retailers will now be required to collect sales taxes on certain purchases made over the Internet.

Despite higher rates, the ongoing recession has depressed business and individual earnings to the point where the state will collect less money.

That means public schools, state universities, and health and transportation programs will see budget cuts.

Perdue said she plans to sign the compromise measure this week but is not happy with the final product. In particular, she said that local mental health agencies will take a harsh cut.

“We’re talking to them to see how badly the cut will hurt them,” Perdue said, holding out hope that a $40 million statewide cut could somehow be blunted before the legislature adjourns this month.

“I think there is definitely going to be less services and definitely people waiting for service,” said Glenna Harford, business manager for Guilford Center, which works with low-income mental health clients. In addition to general operating cuts, she said, there will be less money for services that help people live outside treatment facilities and less money for high-level residential treatment centers for children.
 

“Those are really big services, and I’m not sure what’s going to happen with those clients,” Harford said.

That sense of uncertainty permeates the budget. Even after it goes into effect, state agencies will have to make hundreds of decisions about how to achieve cuts ordered by the General Assembly.

Of 2,191 positions cut from the state budget, 726 are filled by workers who will be laid off. But that doesn’t count cuts in public schools, where lawmakers left local school districts a great deal of latitude in how to absorb cuts. The only clear mandate from the legislature was that school systems are not to increase class sizes in kindergarten through third grades.
 

And Perdue said that school systems should use federal stimulus funds that came directly to the districts to offset cuts from the state.

Republicans by and large did not participate in shaping the final version of the budget.

But as they debated the measure in and out of their legislative sessions, members of the two parties didn’t sound like they were talking about the same bill — or even speaking the same language.

“The Democrats have not cut spending,” said Sen. Phil Berger, an Eden Republican and his party’s leader in the chamber. “What the Democrats have decided to do is maintain government spending at the same level and raise taxes.”

Berger and other Republicans says Democrats failed to properly account for more than $1.3 billion in federal stimulus funds. And they say that Perdue trimmed state spending during the year to a point where the actual budget gap was manageable without a tax increase.

“We don’t claim we’re flush with cash or that there’s a rosy scenario of economic prosperity,” said Rep. Paul “Skip” Stam, an Apex Republican and his party’s leader in the House. “What we are saying is that the state was able to provide an acceptable level of service at this level of spending and all these claims that they make in order to frighten people into massive tax hikes is just that, it’s rhetoric and fear and not reality.”

But Democrats accuse the Republicans of cooking the numbers. For example, Democratic leaders point out that Perdue needed to raid state savings accounts and trust funds and temporarily furlough workers to balance the books this year.
That’s money that lawmakers weren’t able to tap for the budget that was supposed to take effect July 1.

“It simply makes no sense to start from the place that they start from,” said House Speaker Joe Hackney, a Chapel Hill Democrat. He slammed Republicans for not cooperating in building the budget.

“At the end of the day, based on the statements of our political opponents ... what you are left with is this: They are not up to the job of governing in a recession when decisions are hard and things are tough. A position of 'No, we will not cut,’ and 'No, we will not tax,’ is a decision not to participate.”

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