State budget preview puts raises at 2%

Lawmakers briefed on Gov. Easley's proposal say it seeks $20 million to attract new jobs

Staff WriterMay 5, 2004 

Gov. Mike Easley's proposed budget includes a modest pay raise for state workers and hefty new spending on job-growth programs, lawmakers briefed on the plan said Tuesday.

In a spending plan for the year beginning July 1, the governor will propose a 2 percent pay raise plus a one-time, $250 bonus for state workers and public school teachers, lawmakers said.

Easley also plans to call for an emergency appropriation of $20 million to the One North Carolina fund, to allow him to continue awarding grants to new or expanding industries that have promised new jobs and investment.

And he will suggest reducing payments to pharmacies by $11.5 million for prescription drugs for Medicaid patients -- an item likely to start a major lobbying campaign by pharmacies and drug companies.

Easley, who on Tuesday proposed $47.6 million in spending and tax cuts for small businesses, is expected to release his full budget proposal Monday, the opening day of the General Assembly session.

State Rep. Wilma Sherrill, a Republican from Asheville who was one of the House budget leaders briefed Tuesday, said the governor's budget did not contain any great surprises or controversies. She said, however, that there is likely to be debate over how to give state workers decent pay raises this year after three years of paltry ones or none at all.

"Everyone on both sides of the aisle or road or whatever you want to call it feels we have to do something for state workers," Sherrill said.

Dana Cope, executive director of the State Employees Association, said he was disappointed with the proposal, which is much smaller than the 5 percent raise his organization wants.

Each percentage point of additional pay granted to workers costs about $96 million per year. Easley's pay proposal would cost about $200 million.

Sherrill said she's more inclined to give a flat dollar amount rather than a percentage raise, to give low-wage workers a greater boost.

"Two percent of $15,000 per year is a heck of a lot less than 2 percent of $80,000," she said.

Lawmakers said they were told by Easley budget adviser Dan Gerlach that the information was preliminary and that details could change in the governor's final proposal.

"The governor's budget is still in flux," Easley spokeswoman Cari Boyce said later. "We anticipate it being finalized early next week."

Easley and legislators do agree on one thing: The state is on track to collect about $190 million more this year than predicted.

In addition, Gerlach told lawmakers that state agencies will leave about $100 million unspent when the current fiscal year ends June 30, the legislators recounted.

As a result, both pots of money will carry forward and help the governor and lawmakers balance the 2004-05 budget. Although the $15.5 billion budget was first approved last summer, politicians want to add a number of high-dollar items from a wish list that totals hundreds of millions. They include:

* Adding to the repair and renovation fund.

* Increasing teacher bonuses.

* Replenishing the rainy-day fund.

* Covering university enrollment increases.

* Accounting for Medicaid inflationary increases.

* Expanding Easley's smaller class-size initiative to the third grade.

All of those items are likely to be included in Easley's proposal. One thing not in there, lawmakers said, is a proposal supported by legislative leaders to finance four research facilities at public universities across the state.

At a news conference Tuesday, House Speakers Jim Black and Richard Morgan said they want to finance the projects this session, but only if the state can afford them. They also said they expect to pass a budget quickly and adjourn by early July.

Sherrill said, "We're on a fast track."

(Staff writer Dan Kane contributed to this report.)

Staff writer Amy Gardner can be reached at 829-8902 or agardner@newsobserver.com.

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