- Associated Press - Tuesday, June 23, 2015

RALEIGH, N.C. (AP) - The North Carolina House formally rejected Tuesday the budget proposal that senators wrote and approved last week, but not before top leaders criticized senators for the major policy changes they inserted that are likely to drag negotiations deep into the summer.

The House floor vote against the Senate proposal, which was unanimous, was expected. House Republicans got support last month from most Democrats in passing their own two-year spending plan.

Senate GOP counterparts, however, rewrote the House proposal dramatically, writing another 179 pages while spending $21.5 billion, or nearly $700 million less next year than what the House wants.

The rejection sets the stage for a conference committee comprised of House and Senate members to be formed. They will attempt to work out a compromise that seems at least weeks away. It certainly won’t be approved before the new fiscal year begins July 1. A stop-gap spending measure will be needed to keep government operating at current levels after that date.

“There are obviously differences between the approaches,” Rep. Nelson Dollar, R-Wake, senior co-chairman of the House Appropriations Committee, said on the House floor. He added he expected the two chambers would “arrive at a solution that is appropriate for the citizens of North Carolina.”

Dollar lamented a number of policy changes in the Senate plan, including a dramatic change in administering and governing Medicaid, the second largest program in the state budget at more than $3.5 billion. There are also major tax and economic development changes inside the Senate budget. The House ran Medicaid and economic incentive changes separately in non-budget bills.

“The budget should be for truly budgetary items,” Dollar said.

Senate Republicans have defended their weighty budget, saying Medicaid and tax changes were policies interconnected with carrying out state spending and would best be handled during budget negotiations.

House Republicans took more jabs at the Senate’s taxes and incentives during a House Finance Committee earlier Tuesday.

Some committee members complained about a redistribution of local sales taxes in the Senate plan that would help many rural counties but could mean losses in urban counties. Corporate and individual income taxes would be lowered further, and the items subjects to the sales tax base would be expanded to include advertising, car repairs and pet services.

“We are fundamentally transforming … the economy of North Carolina,” said Rep. Jason Saine, R-Lincoln, a senior finance committee chairman. He said there would another committee meeting Thursday to review the plan because it “should not be rushed through the legislature.”

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