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The Associated Press May 3, 2011, 5:34PM ET

Taxes, layoffs are issues in NC House budget

The House on Tuesday debated a proposed $19.3 billion North Carolina state budget pushed by Republicans, who call it a right-sized plan that ends temporary tax increases, while Democrats argue it would devastate education and cause too many government employee layoffs.

Legislators discussed a two-year budget plan but focused on the fiscal year starting July 1. The debate had gone on for more than five hours and had voted on more than 25 amendments before the first of two required votes on the plan.

The Republican majority pushed back several Democratic amendments that would have removed or weakened provisions that would bar state funds to pay for elective abortions for state workers and their dependents that are members of the state employee health insurance plan. They also rejected efforts to restore state grants and contracts for Planned Parenthood.

GOP budget writers had to close a roughly $2.5 billion gap between projected revenues and expenses for the coming year, in part by spending $600 million less than Democratic Gov. Beverly Perdue had proposed in February. They cut $900 million more in the big spending categories of public education and health care than Perdue did.

The biggest differences between the competing plans may be on the revenue side. Perdue kept in place three-quarters of a cent sales tax increase approved by the Democratic majority in 2009 to close a budget gap at the height of the Great Recession but that is supposed to expire June 30. Republicans would let the entire penny expire.

"It was a promise that we made to the citizens, each and every one of you made that promise," said Rep. Mitch Gillespie, R-McDowell, co-chairman of the House Appropriations Committee. "And we're going to keep that promise. "

Democrats counter they never pledged in 2009 to eliminate the sales tax and higher tax bills for the top wage earners. They say they only hoped that a recovering economy would render the temporary levies unnecessary, and that letting them expire would result in thousands of needless layoffs.

Tillis said this week the Democrats are exaggerating the number of job losses at well over 20,000, including at least 18,000 in the public schools. He said retirements, vacancies, turnover and flexibility for local school districts and University of North Carolina campuses would reduce actual job losses to fewer than 7,000.

The budget was being debated as several interest groups held rallies outside the Legislative Building to voice opposition to portions of the spending plan. Hundreds of teachers had gathered at a rally organized by the North Carolina Association of Educators and where Gov. Beverly Perdue was expected to speak. Perdue has said the GOP plans could lead to "the largest layoff in state history."

House Republicans also spend more than Perdue does by putting more money in reserves, government building repairs and the state employee retirement funds.

House members also narrowly agreed to again eliminate the Sentencing Services program after it was restored last week in the House Appropriations Committee.

Supporters of Sentencing Services argue the program and its 22 offices are successful at helping defendants turn their lives around by keeping them out of prison and offering judges alternative punishments such as drug treatment and work programs. But people seeking the program's repeal said the $2.1 million is needed for drug abuse treatment for prisoners.

The chamber defeated an amendment to restore money for local dropout prevention grants and to prevent shifting campaign finance operations in the State Board of Elections and lobbying registration offices in the Secretary of State's Office to the State Ethics Commission. But they approved keeping free a state ferry from Knotts Island in far northeastern North Carolina to mainland Currituck County.

House members had robust and passionate debate for abortion and Planned Parenthood provisions. The GOP budget would prevent the use of state funds to perform abortions for State Health Plan members and through other insurance offered by state government except in cases where the pregnancy is the result or rape or incest or if the mother's life is endangered.

"It is removing a health benefit from the State Health Plan ... that the women who work for the state of North Carolina have had an option to use," said Rep. Deborah Ross, D-Wake, who offered an amendment that would have removed the abortion. Workers "faced with this very difficult and sad decision" now would have to pay for an abortion out of their own pockets, she said.

House Majority Leader Paul Stam, R-Wake, said Ross' amendment would have removed all limitations on state-funded abortions after some restrictions in some kind of another has been in place for more than three decades.

"This is totally unprecedented to take it out," Stam said. Another defeated amendment would have extended exceptions to include the woman's mental and physical health and grave fetal impairment.

The budget also will continue to ban funds through grants and contracts to Planned Parenthood and its affiliates for the next two years. Planned Parenthood is also an abortion provider but doesn't use any of the $473,000 it received from the state this year for abortions, but rather family planning, contraception services and teen pregnancy prevention. A pair of amendments to weaken or eliminate the provision was defeated.

After the House votes on the budget, the measure will go to the Senate, which will create its own version. Republicans want to get a final budget bill to Perdue by early June.

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