Proposed Senate Budget Would Leave Out Taxes, Borrow $1.2 Billion For State and University Projects

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Senate Democrats rolled out their proposed state budget for the next two years on Tuesday. It would let two "temporary" taxes finally expire and borrow almost three times what the House agreed to earlier this month for state and university construction projects.

The roughly $20 billion spending plan for the fiscal year starting July 1 is $263 million less than the House budget, primarily because the Senate wants to eliminate a quarter-penny on the sales tax and a higher income tax bracket for the state's top wage-earners.

The House decided to let the two temporary taxes -- first approved in 2001 and extended twice already -- remain on the books for another two years. They would add about $300 million to the government's coffers next year and are expected to be a key point of contention in upcoming negotiations to hammer out a final budget for Gov. Mike Easley.

The Senate made up for the lost revenue by setting aside about $165 million less than the House in the state's already flush rainy-day reserve fund and spending about $116 million less in upfront money on the state's building needs.

Instead, the Senate wants the state to incur more than $1.2 billion in debt to pay for 32 university, prison and other government construction projects. The debt would be issued without the approval of voters in a statewide referendum, which is sure to draw the ire of fiscal conservatives, already upset by the about $450 million in such debt proposed in the House budget.

The Senate also would give 4 percent pay raises to rank-and-file state employees -- the House gave them 4.25 percent. The Senate gave teachers an average raise of 5 percent, matching the raises included in the House and Easley's proposed budget.