North Carolina policymakers appear to be deeply divided over the state budget and much is at stake for low- and middle-income taxpayers. In one corner, the state House of Representatives and the Governor are advocating budget packages that include extensions of temporary tax rate hikes in both the income and sales tax. House leaders say this revenue is necessary to help pay for the growing needs of the state. An exciting development in the House budget is the North Carolina Rewarding Work Tax Credit (a state version of the Earned Income Tax Credit). In the other corner, the state Senate passed a budget which allows the temporary tax hikes to expire and there's no targeted tax credit included. Earlier this week the House voted to reject the Senate's budget, so now the real show down begins. Policymakers must work quickly if they hope to pass a two-year budget by July 1 when the fiscal year begins.