House not ready to look at stopgap budget

"It's better to be safe than sorry and better to do it when you're not under tremendous pressure," Senate Majority Leader Tony Rand said.

The bill orders Gov. Beverly Perdue to keep spending levels at no more than 85 percent of what was allocated in the past year's budget because lawmakers are reducing spending due to declining tax collections.

The temporary spending plan prevents any pay increases for state workers, such as automatic step increases, from taking effect unless authorized by the General Assembly.

The temporary spending plan is unusual on two counts: It includes no expiration date, and the Senate rolled it out early – a week before the fiscal year ends. The latter point signals the large differences between the House and Senate on the two-year spending plan and the fading hope that a budget can be approved before July 1.

House members, however, said they want to continue working on the budget in the final week of the current fiscal year and don't yet want to consider the Senate's continuing resolution.

"The House would prefer not to do a continuing resolution. We'd prefer to get the budget done," House Majority Leader Hugh Holliman said.

Holliman, D-Davidson, also said House leaders want an end date on any temporary spending plan.

Continuing resolutions traditionally have expired after two or three weeks, forcing lawmakers to pass another temporary plan if they haven't completed the budget in that time.

"It doesn't need to go on forever," Holliman said of the Senate's continuing resolution. "We need a time limit. We need to put some sense of urgency into our process."

Rand, D-Cumberland, said lawmakers should focus on finalizing a budget without the need to adopt successive continuing resolutions.

"I think we’re better off spending our time trying to resolve all this, and when we’re through, we’re through,” he said. "I don't know anything you could do to increase my sense of urgency. Putting a date in (the continuing resolution) certainly won't."

The dispute over the stopgap spending plan pales in comparison to the budget standoff between the House and Senate, but it has left political observers shaking their heads.

"It makes you wonder how long this sort of standoff with the negotiations will continue," said Stephen Jackson, a public policy analyst with the N.C. Budget and Tax Center.

Although House and Senate negotiators have agreed on extensive cuts to education and human services – the two largest pieces of the state budget – they remain far apart on the revenue side of the equation.

Perdue in recent days has urged lawmakers to raise $1 billion to $1.5 billion in new taxes to avoid drastic cuts to education.

House members want to use a quarter-cent sales tax increase and higher income taxes on couples making more than $200,000 a year to generate most of the additional revenue. Senate Democrats have balked at the idea of higher sales and income taxes, however. They want to lower the sales tax and begin taxing a range of services, from car repairs to lawn care to home improvements.

"It's just a process we need to go through and certainly is a give and a take. Sometimes, it takes a little time to get that done," Holliman said.

The state Department of Revenue could generate an additional $150 million for lawmakers to work with in the next six months by resolving some corporate tax cases, Revenue Secretary Ken Lay said.