(RALEIGH) -- Lawmakers approved a combination of tax cuts and higher service fees that are included in the $19.4 billion Senate budget. The Senate Finance Committee passed the proposal, which would reduce the state’s overall tax burden by $635 million during the next two years.  The plan also allows a temporary one-cent sales tax to expire on June 30.

The budget would reduce the individual income tax rates by a quarter percentage point for the next two years.  It would also provide small business owners with a $50,000 tax credit if the company’s gross receipts are less than $825,000.
 
Sen. Bob Rucho, R-Mecklenburg, said the relief package is the cornerstone to economic recovery. “We’re very excited about this – especially at this time when Main Street is struggling.”
 
The budget plan does include $104 million in new fees. The bulk of that money would come from higher court costs, although counties would keep nearly $35 million.
 
In addition, the Senate plan would eliminate several existing tax deductions including an incentive for recycling oyster shells, along with a sales tax exemption for nutritional supplements and certain Energy Star products.
 
Most of the Senate provisions are similar to a version already approved by the House. However, there are a few noteworthy changes. The Senate wouldn’t give local schools the ability to charge up to $75 for driver’s education training.  In addition, all ferry routes would be tolled under the Senate version. The House exempted some routes in its budget in order to gain support from some conservative Democrats in coastal districts.
 
Senate leaders also decided not to change the corporate income tax rate. Republicans had expressed support for reducing the rate after Democratic Gov. Bev Perdue included it in her recommended budget.  However, Senate Republicans said lower individual tax rates would ultimately provide a better short-term boost for the state’s economy.
 
The budget bill now heads to the Senate Appropriations Committee.  Senate leader Phil Berger, R-Rockingham, said he expects to hold the first of two required floor votes next week.