- Associated Press - Thursday, June 25, 2015

RALEIGH, N.C. (AP) - North Carolina lawmakers are less than a week away from a new fiscal year and they don’t yet agree fully on how state government should operate during expected prolonged budget and tax negotiations.

The House and Senate adjourned Thursday for the weekend without a stop-gap spending measure, although Republican leaders on both sides indicate they’re close. The government’s new year begins Wednesday.

“I’m pretty confident you’re going to see something Monday,” said Sen. Harry Brown, R-Onslow, co-chairman of the Senate Appropriations Committee. House Rules Committee Chairman Rep. David Lewis, R-Harnett, also anticipated an agreement Monday or Tuesday.

A temporary measure is needed because the two chambers passed competing two-year budget plans that are far apart on Medicaid, taxes and incentives. The Senate also would spend nearly $21.5 billion next year, or close to $700 million less than the House would.

Senate and House Republicans confirmed some sticking points in what’s labeled at the Legislative Building as a “continuing resolution.” They include funding for teacher assistants and on driver’s education, and even how long the temporary spending measure would cover.

The expiration date on the stop-gap plan can signal the potential length of negotiations. Lewis said House GOP leaders prefer one that would expire at the end of the September while the Senate wants something a little shorter.

But Brown didn’t see the expiration date as an issue and believed actual budget negotiations wouldn’t extend two or three months.

“I don’t think it’ll be that long,” Brown said, adding that “you’ve got to be willing to compromise; … sooner or later people start moving.”

The teacher assistants are important because school districts will begin looking at personnel decisions as the traditional school year resumes in August. The House wants to keep assistant funding levels on par with this school year at $376 million, while the Senate wants to reduce it to $75 million by 2016-17 as it shifts focus to hiring more early grade teachers.

“There is a difference in philosophy between the House and the Senate that simply needs time to be worked out,” Lewis said.

The House formally rejected the Senate’s two-year spending plan earlier this week, but the chambers have not yet announced legislators who will attempt to forge a compromise.

Negotiations on the temporary spending measure heated up but then broke off hours after the House Finance Committee again debated and received public comments - mostly negative - toward broad tax changes in the Senate’s budget.

Executives for associations representing North Carolina hospitals and private colleges and universities spoke out strongly against a Senate provision that would decrease a cap on sales tax exemptions for nonprofits in phases from the current $45 million to $1 million in mid-2020.

“The difference that this refund makes is often what the difference (is) between black and red for those that are even able to operate in the black,” Cody Hand with the North Carolina Hospital Association said.

Asheville Mayor Esther Manheimer and Greenville Mayor Allen Thomas also spoke against the Senate’s proposed redistribution of local sales taxes, which would generally help rural counties at the expense of urban counties.

Senate leader Phil Berger, R-Rockingham, said he believes the House will come around to the Senate’s local sales tax position as representatives are educated fully on the Senate’s budget.

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