House tailors budget that hems in taxes

State House members gave tentative approval Wednesday to a $21.3 billion budget proposal that provides modest pay raises for teachers and most state employees, holds the line on taxes and borrows roughly $550 million for construction at prisons and public universities.

The budget proposal increases spending by 3.3 percent from the current year, the smallest percentage year-to-year growth since 2002. It is roughly $690 million more than the current budget but nearly $190 million less than what Gov. Mike Easley proposed. The House proposal also includes about $50 million in additional tax relief for lower-income working families, small businesses that offer health insurance to employees and fully disabled military veterans who were injured on duty.

The vote was 102-12, with 39 Republicans joining 63 Democrats in support. All 12 no votes were from Republicans.

Two late changes

House members made two changes in the budget proposal that quelled recent controversies.

One amendment spoke to the 5 percent pay raises the state lottery commission recently approved for staff. By a 116-0 vote, House members voted to require that lottery staff be treated the same as other state employees with regard to pay raises.

If the amendment, offered by Rep. Ty Harrell, a Raleigh Democrat, becomes part of the final budget, lottery staff will likely see their raises decrease.

The House has proposed an increase for rank-and-file workers of 2.75 percent or $1,100, which ever is greater. Easley has proposed a 1.5 percent pay increase, a $1,000 one-time bonus and an additional week off with pay.

Efforts to reach lottery officials were unsuccessful.

House members also stopped a provision that could have placed some newly released pedophiles, rapists and other sex offenders in hotels at public expense.

The amended provision specifically bars the department from sending felons to "a hotel, motel, nursing home, adult care facility, group home containing the physically or developmentally disabled, or residential facility where minors are housed."

The Correction Department would still be allowed to pay for temporary housing for felons released from prison who are on parole, probation or some other form of post-release supervision, but only to place them in a homeless shelter, halfway house or other housing that the federal government provides for offenders.

Lawmakers also said that the temporary housing can last no more than 30 days, and ordered a study into the feasibility of setting up temporary housing for released felons who can't find a place to stay.

The Correction Department sought the provision after finding it difficult to place sex offenders because of new laws that prevent them from being within 1,000 feet of a school or child care center and local ordinances that have banned them from parks.

What's next

The House is scheduled today to vote a second time on the budget before sending it to the Senate. There could be a showdown over the real-estate transfer tax option that lawmakers offered to counties last year.

State senators sat in on many of the House budget meetings, so they expect to put out their budget proposal quickly. Senate Majority Leader Tony Rand, a Fayetteville Democrat, said there aren't many differences of opinion with the House, and he predicted the Senate's proposal would be released next week.

He cited three areas where the Senate could make changes:

* UNC system enrollment. The House did not fully fund the UNC system's $34.6 million request for greater than expected enrollment. Rand said the Senate will likely make up the $20 million difference. Easley has also sided with the UNC system. House budget writers said they reduced the amount because it more closely matches growth in enrollment over the past five years.

* Teacher pay. Rand said the Senate may try to do better than the 3 percent average pay raise for schoolteachers in the House proposal. He said the House's proposal for most state employees would mean some lower-income state employees would get a better pay raise than teachers, which the state is trying hard to recruit and retain. Easley has proposed a 7 percent pay raise for teachers, but he wants to raise cigarette taxes to do it. Senate leaders, like the House, have shown no interest in raising taxes.

* Borrowing for construction projects. Rand said the House is putting too many projects in motion with planning money, when it's unclear that the state has the money to eventually build them. He would rather put the focus on the most needed projects and spend less on planning.