State OKs $21.4 billion budget

The spending plan includes no tax increases, but teachers' raises will be modest, and $857 million will be borrowed

North Carolina will have a $21.4 billion budget that requires no tax increases, but includes modest pay raises for teachers and most state employees and a hefty $857 million in borrowing for construction projects.

The House and Senate tentatively approved the spending plan Monday night. The budget, which comes a week after the start of the fiscal year, is 3.4 percent higher than last year's $20.7 billion budget, but ends several years of much larger year-to-year budget growth.

"It is both fiscally responsible and responsive to the people who are having a difficult time making ends meet," said House Majority Leader Hugh Holliman, a Lexington Democrat.

The vote was 97-21 in the House, with a majority of Republicans in support, and 34-16 in the Senate in a more party-line vote. Democrats control both chambers. The budget will need to be voted on a second time by both chambers today before it can be sent to Gov. Mike Easley for his signature.

He has not indicated his support for the budget legislation, though legislative leaders made several changes to appease him in recent days.

Republicans who spoke against the spending plan said that the state should cut spending in the tough economy, and limit borrowing without voter approval. They suspected that the spending plan is built on unrealistic revenue growth of 3.5 percent.

"It's like we've got a credit card, and we just continue to max it out," said Senate Minority Leader Phil Berger, a Rockingham County Republican.

Democrats countered that the borrowing does not hurt the state's credit rating, and will provide an economic boost.

"We can build cheaper now than probably any time in the future," said Rep. Bill Owens, an Elizabeth City Democrat. "The contractors are hungry, they need the work, interest rates are low. It's a good time to do it."