07/09/2008

By GARY D. ROBERTSON  / Associated Press

The General Assembly gave final legislative approval Tuesday to a nearly $21.4 billion budget bill for state government, a measure that now will get the close review of Gov. Mike Easley.

Following its initial approval Monday night in both chambers, the spending plan for this fiscal year was approved 97-20 in the House and 32-14 in the Senate with little debate compared to Monday's floor sessions.

Now lawmakers hope Easley will sign the bill into law. He was unhappy at times with his fellow Democrats during two weeks of intense House-Senate negotiations.

But legislative leaders ultimately agreed before the July 4 weekend to delay by a year a pair of tax breaks and make some spending reductions. Easley had demanded changes after tax collections missed estimates by a total of $63 million in May and June.

Easley's office hinted late Tuesday the governor was pleased with the changes. Easley, who is in his eighth and final year in office, has never vetoed a budget bill.

"The governor hasn't fully reviewed the bill at this point, but he believes there has been some positive movement," Easley spokesman Seth Effron said.

A majority of House Republicans also were pleased enough with the plan to join Democrats in voting for the final spending package, which adjusts the second year of a two-year budget approved last summer.

They were pleased with the pay raises given to public school teachers and state employees despite a slowing economy. And the overall spending increased by less than 3.4 percent, less than half the growth rate of 2006 and 2007.

"The overall spending trend is down considerably from what we have seen the Democrats do in recent years," said Rep. Nelson Dollar, R-Wake, who voted for the bill. "There were no tax increases for a change," a few tax cuts and the phase-out of a $172 million annual payment siphoned from a dedicated road-building fund.

But other Republicans said the budget authorized too much debt — $857 million over the next four years — to construct 1,500 additional prison beds, university and state buildings. None of the borrowing requires voter approval in a referendum.

The bill also provides seed money for another $1 billion in capital projects that GOP members argued if carried out ultimately could threaten the state's prized triple-A credit bond rating. They also say it may require additional taxes to pay for other needs such as transportation.

"We are on our way to maxing out our credit limit," Senate Minority Leader Phil Berger, R-Rockingham, said during Tuesday's brief debate. "We are tying down the future in North Carolina."

Democrats contend the borrowing remains reasonable and is needed to prepare the state for a population projected to grow from 9 million today to 12 million in 2030.

Easley didn't get all that he wanted in the budget process. His plan for average 7 percent raises for teachers to help get their salaries to the national average never took off because it required raising taxes on cigarettes.

Instead, teachers would receive average 3 percent raises while other state employees would receive the greater of 2.75 percent or $1,100 — less than what either group wanted. Easley's More at Four preschool initiative also would get $30 million, not the $45 million he sought.

But as other states are laying off workers or offering little or no pay raises, "I think we did a pretty good job," said Rep. Mickey Michaux, D-Durham, senior co-chairman of the House Appropriations Committee.

The budget bill also:

_ gives $25 million to help begin construction on a proposed toll road circling Raleigh.

_ sets aside an extra $14.2 million in lottery funds to boost construction funding in school districts that have received less under the current formula.

_ orders officials to require all state agencies to develop a unified e-mail system by Jan. 1, 2010. A consolidated system will make it easier to store public, electronic records.