North Carolina lawmakers in both the House and Senate preliminarily approved the $19 billion state budget Tuesday night.

House members debated the plan for more than three hours because more than 700 state employees will loose their jobs and there are more than 500 cuts to government services.

"This is one of the most difficult years and the most difficult budget of my legislative career," said House Speaker Joe Hackney.

He described steps to balance the state budget as "austere'.

Democratic budget writers used a balance of cuts, federal stimulus money and taxes and fees to reach the bottomline.

Most North Carolina taxpayers will share the burden with a penny increase in the sales tax to generate $800 million.   

Most consumers would pay 7.75 percent for the next two years.

Republicans argue a recession is thte worst time to raise taxes.

"It's is a very large tax increase on working families here in North Carolina and it's the wrong prescription in a recession.

 A final vote on the budget is scheduled for Wednesday.

Perdue said she would "reluctantly" sign this latest proposal. She vocally opposed a previous proposal because it contained a 2 percent income tax increase.

Click the video monitor above for our NBC 17 News story with both sides of the budget debate.