The House and Senate appropriation chairs spent the majority of the week working on their proposals to the other chamber. There were no joint meetings between the Senate and House Appropriation chairs this week.
There are two main issues that have caused this stand still in the budget process. The first is the significant differences on how to raise revenue and the second is once the revenue package is agreed upon how will the additional revenue be allocated to Education, Health and Human Services and Justice and Public Safety.
The Finance Conference Committee chairs are also in a stand still regarding how to raise the revenue with the House and Senate firmly entrenched in their legislative proposals.
The Senate has a package that will raise around 1.2 billion dollars the first year by radically changing how taxes are collected. The Senate package would expand sales tax collections to services while over time lowering the rate. The House uses a more traditional approach including sales tax increase and an increase in income tax for the highest tax brackets.
In addition to the debate between the appropriation chairs and the finance chairs, this week Governor Perdue set forth her tax plan. Governor Perdue presented a menu of tax options that include a temporary one-cent sales tax increase and a two-year surcharge on individual income taxpayers making at least $500,000.
It was unclear as the week ended if the Governor’s call to go above the $1 billion dollar revenue figure had any impact on lawmakers. What is clear is that there is growing concern in the House that there may not be the needed 61 votes to get a revenue package passed that goes over the $1 billion dollar mark.
This weekend Senate and House Appropriation chairs will be remaining in Raleigh to continue the budget process. In the meantime, both the House and the Senate are preparing a second continuing resolution as the current continuing resolution is slated to expire on July 15, 2009.