he Senate's proposed $18.8 billion budget spends most of an estimated $2 billion surplus on state employee pay raises, tax cuts and boosts for programs shortchanged during leaner times this decade.
"One of the greatest things about this budget is it shows that North Carolina is recovering," Sen. Walter Dalton, D-Rutherford, one of the three chief budget-writers, said Tuesday. "North Carolina is coming back. We made some tough decisions in the last budget to put us in better shape this year to come to do some better things for North Carolina."
The bill would spend more than $700 million on average 8 percent pay raises for public school teachers, 6 percent raises for university workers and community college faculty and 5 percent raises for rank-and-file state employees. The university and community college employees also would get a one-time 2 percent bonus.
Faced with one its largest surpluses in decades, the Senate sets aside $105 million in new spending to improve community crisis services for the mentally ill, add more local psychiatrists and expand treatment centers for alcohol abusers and the developmentally disabled. The state also would borrow to build replacements for psychiatric hospitals in Goldsboro and Morganton.
A portion of the state's excise tax on alcohol would be dedicated to a trust fund designed to help move more mental health services from state institutions to local treatment centers. The alcohol tax would not go up.
The budget, which was approved Tuesday by the Senate Appropriations Committee, would begin to phase out "temporary" increases in sales and individual income taxes passed in 2001. Besides the quarter-penny reduction in the state sales tax Gov. Mike Easley sought, the Senate also wants to cut the top marginal individual income tax rate from 8.25 percent to 8 percent.
The Senate Finance Committee also intends to propose that the gasoline tax be capped at the current level of 29.9 cents per gallon, according to the office of Senate leader Marc Basnight, D-Dare.
The Senate budget also suggests a handful of policy changes, including raising the minimum wage by $1 per hour to $6.15, as well as repealing a requirement approved last year that requires all kindergartners to receive a comprehensive eye exam.
The Senate would set aside $4.8 million to hire 100 literacy coaches to help improve reading comprehension among middle-schoolers, a provision sought by Gov. Mike Easley in his budget.
But the Senate declined to honor Easley's request for $42 million for poor school districts, instead agreeing to restore $44.3 million in spending cuts for all local school districts ordered annually since 2003.
The proposal recommends hiring 90 new prosecutors, 16 District Court judges and 75 deputy court clerks to help a clogged court system that fell behind earlier this decade.
Other agencies that have seen flat or declining budgets saw increases this year thanks to the budget surplus.
"It helps when there's more money on the table," said Karen Ponder, president of the North Carolina Partnership for Children, which oversees the Smart Start child initiative. The Senate budget would increase its budget by $14 million, or about 7 percent.
The full Senate scheduled the first of two required votes on the budget for Wednesday. The House will pass its own budget. The two chambers hope to agree on a final spending plan before the current fiscal year ends June 30.