Pricey Harrison

Friday, July 08, 2005

Budget Update 07-08-05

Legislators in both the House and Senate continued their efforts to try to reach a compromise on the budget following last week's action to extend budget negotiations and keep our state government running through July 20,2005.

Gov. Mike Easley also met with House and Senate Democratic leaders and budget chairs on Wednesday to discuss tax and budget issues as the Legislature tries to work out an agreement on both. House Speaker Jim Black expressed his opposition to any tax cuts - especially those that would go to individuals making an average of $800,000 per year - if that meant education would face spending cuts in the budget. Senate Democrats have pushed to lower the marginal tax rate for the highest wage earners from 8.25 percent to 7.75 percent. Some House members said at the end of last week that they would accept that tax cut only if it could be coupled with tax reductions for low- and middle-income people. However, these tax cuts would take more than $120 million out of the state budget, which we currently can't afford.

A number of House Democrats still would prefer no tax cuts at all in order to ensure adequate funding in the budget for priorities such as education at our K-12 schools, universities, and community colleges, health care and human services for our state's neediest citizens, and public safety programs for our neighborhoods. House Democrats will continue discussions with members of the Senate regarding the upper income tax and a possible reduction in the sales tax, but remain committed to passing a budget as soon as possible that adequately funds these priority programs as well as efforts to further strengthen our economy and create jobs. Other major points of negotiation include whether the tobacco tax will be increased by 25 cents or 35 cents and whether lottery provisions will be included in the budget.

Also on Wednesday, Senate leader Marc Basnight, D-Dare, cancelled all committee meetings unrelated to tax and budget issues while Senators work out an agreement with the House, which means that many House bills will not be considered by the Senate. House committees are continuing their work as budget talks continue in an effort to wrap up non-budget bills before the end of session.

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