RALEIGH, N.C. (AP) – House budget writers rolled out portions of their spending plan for next year Thursday, recommending more money for dropout prevention programs but failing to meet expectations of Gov. Mike Easley on preschool funding and teacher pay.

Public school teachers would receive on average 3 percent raises as part of the tentative plan released by Democratic leaders, much less than the nearly 7 percent sought by Easley in his budget two weeks ago.

The House budget also offers $50 million in tax credits, including an increase in a tax break just approved last year for the working poor, Majority Leader Hugh Holliman said.
The education spending proposal approved by a House subcommittee Thursday morning only provides half of what Easley sought to increase the number of children served by his signature More at Four preschool program.

And the $23 million extra isn’t a permanent increase as in previous years, meaning Easley’s successor next year would have to lobby to retain the money to pay for preschool for 4,200 children considered at risk of failing later in school.

House leaders didn’t have as much money to spend overall because they opposed any new revenues, such as Easley’s proposal to raise $165 million next year through higher alcohol and cigarette taxes.

“That has not so far gotten any traction,” said Rep. Phil Haire, D-Jackson, co-chairman of the House Appropriations
Committee. “That’s a big problem right there.”

Easley, who is leaving office in January, has said the 7 percent raises are needed to get teacher salaries above the national
average.

But Holliman said chamber leaders wanted teacher salary increases to be more in line with rank-and-file employees, who
would receive the higher of a 2.75 percent increase or $1,100 in the House budget. Easley had offered a 1.5 percent increase for state workers, with a one-time bonus.

Easley administration officials held back on criticizing the plan, saying they wanted to see the entire budget first. Top House leaders were expected this weekend to finish the plan and bring the full budget bill to the floor next week.

The Senate will approve its own version of the budget. The two chambers want to get a budget bill to Easley’s desk for his
signature before the new fiscal year starts July 1.

The House’s education budget proposal agrees with many of Easley’s budget suggestions but reflects slightly different
priorities.

It would earmark $15 million more for grants for a program championed last year by the House for local projects that aim to reduce the dropout rate. Easley offered no additional money for that.

The plan also gives $6 million to help public school students at risk of academic failure, $3.2 million for gifted students and $4 million to help cafeteria workers meet new nutrition standards. Another $45 million would go to pay for soaring school bus diesel fuel costs.

But the House only provided $70 million for annual teacher performance bonuses, less than the $100 million sought by Easley in his budget. The rest would have to come from leftover funds in the education system.

And they gave the University of North Carolina system only $14.6 million of the $34.6 million that university leaders say they need to spend for an expected enrollment increase of roughly 6,000 students this coming year.

The health and human services subcommittee also told the state Medicaid program to reduce the Community Support program by $65 million through tougher eligibility and service guidelines. That’s $29 million more than the panel proposed last week.

Community Support is supposed to help mental health patients or substance abusers with social skills training or other assistance so they can stay in their homes while receiving treatment. But a state review found that potentially hundreds of millions of dollars was wasted in the program due to lax restrictions.

The House budget would increase the size of the state’s version of the earned income tax credit, which is expected to provide tax refunds and rebates to an estimated 765,000 households beginning with tax returns filed for 2008.

A qualifying family of four could receive a $241 tax credit compared to $169 under the current program, said Rep. William Wainwright, D-Craven, one of the bill’s primary sponsors.

“As we have witnessed a rise in gasoline prices, food prices, pharmacy prices, trying to pay mortgages,” Wainwright said. “So we are trying to find progressive ways to help them to make some household ends meet.”

Other spending approved by House budget subcommittees Thursday include:
 - $24.4 million to expand local crisis and walk-in treatment and
hospital beds for the mentally ill, the developmentally disabled
and substance abusers.
 - nearly $4 million to help farmers hurt by the drought to
restore damaged pastures and develop new water sources.
 - $3 million to hire more staff in local probation and parole
offices.