North Carolina OKs Budget Extension as Talks Go On

WASHINGTON - North Carolina passed a two-week budget continuation on Wednesday as legislators continue to debate the biennial budget for fiscal 2010 and 2011.

The temporary budget extends state agency appropriations at 85% of 2008 levels, and will remain in effect until July 16. It ensures that state employees and public school teachers will continue be paid what they received in fiscal 2009.

Legislators in the triple-A rated state are debating an $18 billion general fund budget. It is currently in a conference committee after being passed in both houses. Lawmakers are considering about $1 billion in tax increases that Democratic Gov. Beverly Perdue has called for to prevent spending cuts.

The tax hikes in the budget would create two new tax brackets for the state's highest wage earners. Residents making more than $500,000 would pay 8.5% and those earning between $200,000 and $500,000 would pay 8.25%. Currently, state residents making more than $100,000 pay 7.75%.

The state's sales tax would increase one-quarter cent and several taxes would be initiated or increased for goods ranging from liquor and movies to purchases made online.

North Carolina faces a $4.6 billion budget shortfall in fiscal 2010, according to a June 29 report from the Center on Budget and Policy Priorities in Washington. The estimate does not include federal stimulus funds. The state expects to receive $6.1 billion from the American Recovery and Reinvestment Act, which passed in February.

North Carolina has already begun to allocate stimulus funds. Last month, the state enacted a law authorizing stimulus funds for zero-interest school construction and renovation bonds. The law provides $275.8 million for qualified school construction bonds and $56.7 million for continuing qualified zone academy bonds. In North Carolina, counties issue debt for school districts.

The federal funding comes as the state copes with surging unemployment. In May, North Carolina's unemployment rate rose to 11.1%, nearly double the 5.9% rate in May 2008. It was the second-highest 12-month increase in unemployment among all states.

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