Budget debates continued in North Carolina this week as lawmakers argued over tax increases in the budget, which is now four weeks overdue.

The impasse means legislators will have to extend temporary state financing for a third time when the current measure expires tomorrow at midnight.

Last week, Gov. Beverly Purdue rejected a proposed two-year budget that would have raised income taxes. She said the tax hike would not have done enough to preserve education spending and essential functions while burdening middle class citizens.

To balance the budget, Senate Democrats have proposed expanding the number of services subject to the sales tax. Republicans have offered a plan to cut $633 million in spending to narrow the budget shortfall, the Charlotte News and Observer reported Tuesday.

Triple-A rated 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.

The estimate does not include federal stimulus funds. The state expects to receive $6.1 billion from the American Recovery and Reinvestment Act.

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