Senate Democrats have presented a state budget that includes new spending and $1.1 Billion in new taxes. Senate Republicans unanimously stood against tax increases and offered numerous amendments to offset new taxes.

"These are common sense alternatives to tax increases," said Senate Republican Leader Patrick Ballantine, R-New Hanover. "It keeps promises, rather than breaks promises."

The Senate Democrat spending plan includes income tax increases, a sales tax increase, a tax on food, a tax on candy, and a tax on soft drinks.

The Democrat plan taxes children, and taxes married couples more than single adults living together, postponing tax relief measures due to start July 1.

The Democrat budget increases taxes $499.3 million in fiscal year 2004 and $639.6 million in fiscal year 2005.

As alternatives to increased taxes, Ballantine offered an amendment to save $200 million in spending for vacant positions, save $42 million consolidating administration of 39 worker-training programs, move $270 million from the Golden Leaf fund, and reduce $3.1 million from the Department of Public Instruction bureaucracy in Raleigh.

Regarding taking Tobacco settlement money, Ballantine told Democrats, "we don't touch the Health and Wellness Trust Fund or the Farmer's Trust fund. You all have already taken that money."

Republicans offered more than enough money to offset the Democrat's new taxes. The GOP proposed using some of the additional money to restore funding for teacher's assistants, school custodians and for prescription drugs for older north Carolinians.

The Republican alternative budget was defeated along Party lines with all 28 Democrats voting against the measure.

In another amendment, Senator Robert Pittenger, R-Mecklenburg successfully changed the budget by calling for the implementation of a computer software program that has saved Georgia's Medicaid program $140 million. Senate Republicans have, for many years, worked to eliminate waste and fraud from North Carolina's growing Medicaid system.

Senator Fred Smith, R-Johnston, also offered an amendment that would limit state spending by tying budgets to personal income growth over the prior decade. "Our state needs to have a plan for strategic planning, to have discipline," Smith said. "The way we budget creates inefficiencies." The amendment, he told the Senate would have promoted "effective and efficient government. It would give citizens confidence in our government."

Again, the amendment was defeated by all the Democrats in a Party line vote.

Senator Ham Horton, R-Forsyth offered an amendment that would require reports from more than 8,000 "non-governmental organizations" that together receive more than $776 million in state funds. Those that receive larger grants would be required to account for monies spent with a yearly spending report. Organizations receiving more than $350,000 in state money are already required to deliver certified accounts. Horton's amendment would have suspended funding to organizations that are not in compliance.

Sen. Pittenger also offered an amendment that would have required random audits of at least 20 of thousands of NGO's, to measure results and increase accountability.

Sen. Fern Shubert, R-Union, disputed the Democrat's "creative financing" provisions that would allow the state treasurer to float credit and bonds in a number of ways she fears would violate the state Constitution. She offered an amendment to rid the Senate budget of language that might open up state financing to "the dangers of Orange County derivatives," citing the notorious example of a California county made bankrupt by creative financing.

"I concede that the state has been grossly mismanaged," Shubert said. "But 'borrowing long' is not good business."

"The Constitution says we are can't borrow money without permission from the people," said Sen. Virginia Foxx, R-Watauga. "Creative financing is not what I was elected to do."

Ultimately the Democrat budget passed a second reading along Party lines, 28 - 22.