Negotiations keep going on delayed N.C. state budget

By Gary D. Robertson

RALEIGH, N.C.

Legislative leaders tried to accelerate North Carolina state budget negotiations Thursday by preparing to remain in Raleigh while their colleagues go home for the weekend.

House Democrats planned to keep working with Senate counterparts later Thursday and Friday and could remain this weekend if enough differences are narrowed, Speaker Joe Hackney said.

"It's a sign that we're going to continue to urgently seek solutions to this," Hackney, D-Orange, told reporters. "We're closer together than we were a week ago, but the progress is just too slow."

While lawmakers have been making competing offers for taxes and spending this week, they're still enough apart that they probably won't reach a deal before a stopgap spending measure for state government expires the middle of next week.

Sen. Linda Garrou, D-Forsyth, a chief negotiator for appropriations, said she's hopeful a quick settlement still can be reached.

"I'm here to work this weekend," Garrou said. "I made plans to be here and will be here as long as we need to be here and make substantial progress."

Gov. Beverly Perdue, also a Democrat, has been trying to get the negotiations moving, contending that the state loses $5 million in new revenues and cost savings with each passing day after the new fiscal year began July 1 without a permanent two-year spending plan in place.

She laid out this week a $1.6 billion menu of tax options she'd be willing to accept for the coming year, including a temporary one-cent sales tax increase for about a year and a two-year surcharge on individual income taxpayers making at least $500,000.

Senate and House Democrats say they're still committed to raising about $1 billion this year to narrow a budget gap because they're worried they don't have the votes to generate more.

Hackney said House Democrats would be interested in reaching an agreement using temporary taxes: "I think we've pretty much always been open to that sort of solution."

Democrats had to avoid political land mines most of this decade when a similar half-cent sales tax increase and higher income tax bracket approved in 2001 and designated to last two years remained on the books through 2007. And one-quarter cent of that sales tax increase became permanent.

State Republican Party Chairman Tom Fetzer jumped on the "temporary" portion of Perdue's sales tax proposal, which would raise $843 million this year. Perdue presided over the Senate as lieutenant governor when it approved the earlier sales tax increase in 2001 but did nothing to stop it.

"This is history repeating itself," Fetzer said. "There's no such thing as a temporary sales tax increase. It will be around for a long, long, long time."

The GOP has said the budget gap identified by Democrats at $4.7 billion is exaggerated when actual spending and federal stimulus money are accounted, and that no new taxes are needed.

If lawmakers can't reach a deal by next week, they'll have to extend the current so-called "continuing resolution" that directs Perdue and state agencies how to spend while the final budget is delayed.