General Assembly Nears Budget Completion

The Senate passed a continuing budget resolution Thursday that would keep the state government operating until the end of September.

The resolution also includes a provision for an across-the-board 9 percent tuition increase for all UNC-system students. The proposal would increase in-state undergraduate tuition at UNC-Chapel Hill by $200, while out-of-state tuition would increase by $1,000.

The tuition increase would be retroactive, meaning students would have to pay additional money for the fall 2001 semester.

Also on Thursday, the House made progress in resolving a budget stalemate that has lasted two months into the fiscal year.

House Speaker Jim Black, D-Mecklenburg, introduced a tax increase proposal Thursday that was a combination of the two different plans proposed by the two legislative chambers and a third plan proposed by Gov. Mike Easley.

"The reason for this compromise proposal is that it has elements of all the other proposals -- some elements from the House, some from the Senate and some from the governor," said Danny Lineberry, spokesman for Black.

Black's plan calls for a 1 cent sales tax increase, half of which would replace an annual tax reimbursement the state gives to county governments. The proposal would also increase taxes on wealthy individuals, create a 6 percent sales tax on liquor and boost several tax credits.

While Black's plan breezed through the House Finance Committee on Thursday morning, its real test will come early next week when it goes before the full House. It is unclear if the legislation has enough votes to pass the House.

Previously, Democratic House leaders have been unable to build a consensus on any tax increase proposal because of staunch opposition to any tax increase proposal from the chamber's Republican minority.

But with just a four-seat majority in the House, the real challenge for Black has come from a small group of liberal Democrats led by Rep. Dan Blue, D-Wake, who favor more targeted tax increases on wealthy individuals.

Blue could not be reached for comment Thursday night.

But Sen. Howard Lee, D-Orange, who chairs the Senate Appropriations Committee, is confident that Black's plan has enough votes to pass the proposal. "I am convinced that Speaker Black has enough votes to get this legislation out of the House," Lee said.

Lee added that he expects the legislation to pass the House early next week and arrive on the Senate floor some time in the middle of the week.

Rob Lamme, spokesman for Senate President Pro Tem Marc Basnight, D-Beaufort, would not comment about whether the legislation would pass the Senate. "I'm sure there will be a very lively discussion about it in the House," Lamme said. "But if the House sends it over to us we will certainly take a very long look at it."

But Thursday's developments in the House also complicate matters for the continuing budget resolution that passed the Senate the same day.

Lee said he expects the resolution to reach the House floor next week, where some House members might vote to remove parts of it through an amendment.

If that happens, the resolution would head back to the Senate.

Lee said if the Senate receives both the resolution and the tax increase bill at nearly the same time and the Senate leadership feels that it is close to completing the budget, the Senate might simply ignore the resolution and focus on finalizing the budget.

In that case, Lee said a state budget could be passed late next week.

A previous measure that has kept the government running since the fiscal year started July 1 is set to expire next Wednesday. But if the resolution is not renewed and a state budget is not passed, that could result in a temporary government shutdown.

Lee said he is confident that no matter how the budget situation is resolved during the next few weeks, the tuition increase will remain in place. He added that if the tax package is approved as is, it would generate enough revenue to eliminate the need for further budget cuts.

Black's proposal would generate $400 million in its first year and more than $600 million the second fiscal year.

Lee said, "As it stands now, if the package remains as is, it should be enough to cover all our needs."

The State & National Editor can be reached at stntdesk@unc.edu.