Easley budget heavy on education spending
Gary D. Robertson
Associated Press
May 10, 2006

Raleigh (AP) - Gov. Mike Easley rolled out an $18.9 billion budget proposal Tuesday for the next fiscal year that tilts heavily toward education as he tries to keep a pledge to raise teacher salaries above the national average.

The education package also would add middle-school literacy coaches, expand specialty high schools, spend more in the state's poorest school districts and pay for expected enrollment increases for public schools, community colleges and the University of North Carolina system.

''I think we can say without question that this is the strongest education budget ever seen in the history of North Carolina,'' Easley said in unveiling the plan made possible by a huge revenue surplus and the new state lottery. ''We've been able to make these investments because of our fiscal discipline, because of the way we have held in the reins on spending.''

The extra $2 billion lawmakers can use this year includes a nearly $1.1 billion revenue surplus projected for the year ending June 30, the largest as a percentage of the overall budget in more than 30 years.

Easley's plan to revise the $17.4 billion budget starting July 1 and approved by the Legislature last year also would cut the sales tax by a quarter-penny starting Oct. 1. It's billed as a down payment of sorts to eliminate a ''temporary'' half-cent increase on the books since 2001 that Easley said he would like remove completely by next year. But the budget doesn't reduce the highest marginal individual income tax rate, which also went on the books five years ago.

Easley's budget also would prevent the gasoline tax from going above the current rate of 29.9 cents per gallon, but he doesn't seek a reduction.

Reducing the state's share of the sales tax by 0.25 percentage points would cost nearly $200 million in revenue. If approved, consumers in 99 counties would see their sales tax rate decline from 7 percent to 6.75 percent. In Mecklenburg County, it would fall from 7.5 percent to 7.25 percent.

''It gives everybody a little tax relief,'' Easley said.

Republicans want the entire half-cent to be eliminated this year _ at a cost of more than $450 million _ rather than consider chopping it down over the next two years. House Republican Leader Joe Kiser, R-Lincoln, said legislators would be less likely to complete the job in a non-election year in 2007.

House and Senate Democrats couldn't agree on a sales tax cut last year because both sides wanted it coupled with other tax reductions. Sen. Linda Garrou, D-Forsyth, one of the chamber's chief budget-writers, said reducing the highest individual income tax rate from 8.25 percent to 7.75 percent also should be considered.

''We think it's important to keep our jobs going and our economy going,'' said Garrou, who said the Senate wants to have its adjustments to the coming year's budget passed before Memorial Day.

Easley's budget would raise teacher pay on average by 8 percent, or $323 million, as part of a previously announced effort to raise them above the national average by 2008.

Other rank-and-file state employees would get a 4 percent increase - the largest raise in years, but not enough for some legislators who believe those workers suffered most from budget problems earlier this decade. Several House Democrats have filed bills seeking an across-the-board raise of 7 percent.

''We would like a fair and equitable raise,'' said Toni Davis of the State Employees Association of North Carolina, which wants at least a 5 percent across-the-board raise for all employees, including teachers. ''We believe five is fair for all.''

Eddie Davis, president of the N.C. Association of Educators, praised Easley for his efforts to attract teachers to North Carolina, where school districts must fill thousands of positions annually. Many teachers say they leave the profession due to poor pay.

''Teachers across the state will be very, very pleased,'' Davis said of the proposal.

The plan would raise overall education spending for public schools, community colleges and the University of North Carolina system by $864 million compared to this year. Easley emphasized that was in addition to a projected $425 million in revenues from the North Carolina Education Lottery.

Easley says his budget proposal does not siphon away education money to other non-education state agencies and replace them with lottery profits.

The Department of Health and Human Services _ the second largest state department in the state behind the public schools, would reduce overall spending by $55 million compared to the budget already approved for the fiscal year starting July 1.

Elaine Meija of the N.C. Budget and Tax Center, a periodic critic of state spending, said except for a few shortcomings - not enough money for child-care subsidies, for example - Easley's budget was positive.

''We might be able to see measurable improvement in state services,'' she said.