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RALEIGH — House budget writers hope a package of tax credits they’ve included in their proposed spending plan will spur small businesses to create more jobs.

The House Appropriations Committee is scheduled to vet the $18.9 billion budget proposal today, and the full House plans to take up the measure Thursday.

In an initial review by the House Finance Committee Tuesday, lawmakers gave their blessing to tax cuts for businesses with 25 or fewer employees that provide health insurance or create new jobs.

Rep. John Blust, a Greensboro Republican, attempted to strip those provisions in favor of a broader tax credit for certain kinds of small businesses.

“(This) will do more for those small businesses we’re concerned about than those two credits,” Blust told the committee. “More businesses are more likely to take advantage of a permanent change in the law.”

While incorporated businesses pay a maximum rate of 6.9 percent income tax every year, limited liability corporations and others that report income through personal income tax forms are taxed at a maximum rate of 7.75 percent.

Blust’s amendment would have erased that disparity, capping all businesses taxes at the same 6.9 percent rate. His proposal is similar to an idea in the Senate-proposed budget, which it passed last month.

The idea immediate drew fire from the committee’s Democrats, including Rep. Hugh Holliman of Lexington, who has been a chief architect of the health insurance and job creation credits.

“Keeping the tax credit for health insurance is vital,” Holliman said. “They’ve told us that all over the state.”

Rep. Paul Luebke, a Durham Democrat, said Holliman’s tax credit proposals were tied to helping low-income workers.

“This amendment is not tied at all to job creation. It is simply a tax cut,” Luebke said.

The amendment failed on a 13-16 vote. The full bill was passed out of the committee on a voice vote.

Once the House completes work on its version of the budget, most likely by the end of this week, the two chambers will work on a compromise bill that would then be sent to Gov. Bev Perdue for her approval. A final measure is expected before July 1, the beginning of the state’s fiscal year.

As currently written, the House budget parts ways with the Senate proposal in a number of ways:

* The Senate would cut back funding for Smart Start by $15 million in addition to cuts already made last year. House budget writers would do away with that extra cut.
* The House budget includes a $1 million boost to funding for N.C. A&T’s engineering school that would go toward retaining faculty, recruiting students and bolstering facilities. The Senate budget contained no such provision.

* House budget writers also would provide $1 million in funding annually for the joint A&T-UNCG School of Nanoscience. The new program is ramping up and the additional money would help hire faculty and staff. No such appropriation was included in the Senate budget.

* The House budget uses tax money to pay for an inspector to examine coal ash dams owned by power companies. The Senate budget would have charged power companies an extra fee to pay for this inspector.

* House budget writers would use $126 million in lottery funds to head off cuts to the public school budget recommended by the Senate.

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