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The Daily Tar Heel

House, Senate to Compromise on Budget

The House passed its version June 28 by a 91-27 margin. But senators have spoken harshly against the House-proposed budget and pointed out many areas of strong contention.

A negotiating committee of representatives from both legislative bodies will begin meeting this week to begin hammering out a compromise between the two proposals.

A major issue is how much money the state should generate. "The first item will be to define what level of revenue we'll be dealing with," said Sen. Howard Lee, D-Orange, a co-chair of the committee.

The Senate budget calls for $190 million in tax-loophole closings, or areas of special interest where tax revenues can be increased. But House budget writers refrained from including any tax-revenue increases in their plan, instead relying on techniques like accelerating the payments of employee income-tax withholdings.

"We're concerned with the revenue," said Sen. Tony Rand, D-Fayetteville. "We don't see how we can do these things with the revenue picture they have."

But after the revenue issue is settled, legislators still must to determine how to appropriate the money, with cuts to Education and Health and Human Services likely see the most debate.

Last week, the House passed an amendment that would change a 9 percent tuition increase for UNC-system students. Under the House plan, the increase would only apply only to out-of-state students. But senators are concerned about what this might say about North Carolina's priorities.

"I think that's a mistake," Rand said. "We don't want other states to pick on our students, so we shouldn't pick on our out-of-state students."

The House budget also calls for a $2 million cut to UNC Hospitals. "This hospital, in my opinion, should not receive the cuts the House has proposed," Lee said. "I plan to fight hard against this."

Another major area of debate involves closing the Dorothea Dix Psychiatric Hospital. The Senate plan would close the hospital by January 2003, while the House budget keeps it open.

"The Senate took a bad rap on that," Lee said. "It was never our plan to just throw people out into the streets."

Rand said the hospital might still close, but not without providing an alternative. "I don't think it was anyone's intent to close Dorothea Dix until the adequate facilities are available," he said. "We have to make sure these people are cared for."

The fiscal year began July 1, but budget writers failed to meet this deadline. They instead passed a two-week continuing resolution, which will keep the state government operating until July 16. "Hopefully we'll do this quickly," Rand said. "People need to know what the future holds."

But the final budget still must gain the approval of Gov. Mike Easley, and he has indicated that will be difficult if a lottery bill is not included.

"We naturally would like to get a source we can get money from," said Sen. Aaron Plyler, D-Union, another budget committee co-chair. "A lottery is one of them. I hope we can work out something."

Now some senators are questioning if the budget will even meet the July 16 deadline.

"My thoughts are we are not looking at a budget until late July," Lee said. "We cannot leave Raleigh with this budget as shaky as it is."

Matt Viser can be reached at

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