Under the Dome

Budget battle not likely to cool in August sauna

July 29, 2009 

As August looms, you're not likely to see a budget deal by state lawmakers this week. House and Senate Democrats, who control the legislature, can't agree on taxes. And Republicans want more cutting, less taxing.

A budget deal to raise $990 million in new taxes fell apart last week after Gov. Beverly Perdue said she was opposed to a plan to increase income tax for all state residents. Perdue also said she wanted to see an additional $200 million in taxes to protect education.

The haggling goes on. Here's a rundown:

House Democrats

House Speaker Joe Hackney said House Democrats want to push for a new deal.

Even though there's talk of sending lawmakers home while budget negotiators finish their work, that isn't on Hackney's agenda.

"Our folks want to stay here and work and try to keep the pressure on an agreement," Hackney said.

Senate leaders said they'll work with the House. But so far, there are no negotiations as the Senate works on a plan to reform the state's tax structure. Hackney said it's a little too late for such a complex endeavor. The fiscal year began July 1.

House negotiators want to work off the plan the House and Senate developed last week.

"They've told us that they don't want to negotiate right now," Hackney said. "We'll send them a plan and hope that changes."

The primary order of business this week will be developing a new continuing resolution to replace the one that expires Friday. The resolution would authorize state government to continue operating without a budget.

Senate Democrats

Sen. Dan Clodfelter, a Charlotte Democrat and key budget negotiator, said the budget is late because the House hasn't bought into a Senate plan to reform the state's tax code.

"We've been waiting for the House folks to pick up the challenge with us," Clodfelter said this week. "If it's late, it's because we were waiting on them."

Clodfelter has been a vocal advocate of the plan to lower the overall sales tax rate while taxing a host of new services and items such as car repairs or movie tickets. Even while lowering the sales tax rate for everyone, the new service taxes could raise up to $1 billion, he said.

On Tuesday, the Senate Finance Committee brought in business and tax experts to talk about the benefits of reshaping the tax system so revenues don't fluctuate wildly in good to bad times.

Senate leaders organized a similar presentation in April but have not provided details of how their overhaul would work. It is not written into the form of a bill.

Clodfelter said he and Senate leaders have refrained from publicly rolling out a plan because they don't want to look like they're trying to force the plan on House members.

"We're still trying to massage our working relationship with our House colleagues," Clodfelter said.

Apparently that effort isn't going well.

"We'd like to see a plan if they have one," said Rep. Mickey Michaux, a Durham Democrat and senior budget writer in the House.

Republican leaders

On Tuesday, Republican legislative leaders suggested their own plan. They outlined $633 million in cuts and savings that they say would help balance the state budget without raising taxes.

The list includes: getting $100 million in federal money by allowing more charter schools, saving $14 million by eliminating in-state tuition for out-of-state athletes, cutting $25 million for the state aquarium pier at Nags Head, cutting $5 million in incentives for Apple to locate a new facility in the state and taking $70 million of Golden LEAF Foundation money, which goes to help rural communities, and using it to leverage three times that much in federal matching funds.

House Republican Leader Paul Stam, of Apex, said the state's priorities in education, health care and law enforcement can be met by spending at the level imposed earlier this year by Perdue's cuts.

"We've been doing it for the last seven months," Stam said.

Senate Republican Leader Phil Berger, of Eden, called on Democratic leaders to release the spending side of the state budget while Democrats haggle among themselves over the tax package that goes with it.

"We might find even more savings," Berger said, if lawmakers have a chance to examine spending plans.

By staff writers Benjamin Niolet and Mark Johnson.

ben.niolet@newsobserver.com or 919-829-4521

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