The Senate has tentatively approved a two-year spending plan that would lay off hundreds of state workers and make deep cuts to education. Democrats in charge of the chamber allowed less than two hours of debate before the spending plan was approved 32-16. Republican Sens. Stan Bingham of Davidson County, Fletcher Hartsell of Cabarrus County and Richard Stevens of Wake County joined all Democrats in the chamber in voting for the budget. A final Senate vote could come as soon as today. After that, the spending plan will go to the House, which will draw up a competing plan. In its first year, which begins July 1, the plan would spend $20.05 billion and close a projected $3.4 billion budget gap by cutting expenses, spending $1.7 billion in federal stimulus money and increasing taxes by $500 million. The current year's budget amounted to $21.4 billion. Republicans who opposed the bill argued the Senate should have frozen spending to current levels and alleged the proposal spends more next year than what state government is going to spend this year after Gov. Beverly Perdue cut spending to narrow the current year's shortfall.
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Article Courtesy of the NC Insider Legislative Service.

Sen. Dan Clodfelter, D-Mecklenburg, defended a Senate budget plan that relies on $500 million in unspecified tax hikes, saying it makes sense under the state's current financial cloud. Clodfelter, co-chair of the Senate Finance Committee, and other Senate leaders have indicated that a tax plan could be considered as early as next week. Proposals discussed in closed-door meetings include major changes to sales and income taxes, including lowering income tax rates while eliminating deductions and lowering sales tax rates while imposing taxes on services. Clodfelter said it was prudent to hold off on a tax package while waiting for April revenue figures to come in. "I, for one, would not want to propose any revenue package that raised more money before knowing what the current revenue system will produce," Clodfelter said. "I think that's the correct way to proceed in the current crisis." He added that in previous budget crises, including that in 2001, legislators waited to pass revenue packages separately.
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Note:  Sources close to Senate budget writers believe that the increase in the privilege tax from $50 to $200 for certain professionals (including engineers), as proposed in the Governor’s budget, will not be included in the $500 million “unspecified” tax plan.  However, it is very likely that the Senate will include a tax on professional services as part of their tax package to be revealed later in April.  Final revenue numbers, coming in at the end of this month, are expected to be worse than originally thought.

Article Courtesy of the NC Insider Legislative Service.