No pay raises for state employees. More spending cuts for public schools and universities.

So, why is everyone smiling?

OK, everyone isn't smiling. State Treasurer Janet Cowell isn't. The business owners who provide in-home care to Medicaid recipients aren't either.

Still, for the first time in seven years, North Carolina legislators passed a state budget on time, a day before the start of the new fiscal year. They did so without much acrimony or drama.

No fireworks ensued leading up to this Fourth of July for the simple reason that, in state -budgeting, just like in life, everything becomes relative.

Unlike states like California, Washington or New York, North Carolina isn't laying off large numbers of state employees or ordering across-the-board worker furloughs. The state isn't shutting down state parks. It's not closing prisons (this year).

But again, everything is relative.

K-12 education will see a real, year-over-year reduction in state spending of $330 million. The cut isn't quite as big as it seems because of the shifting around of $121 million in state lottery money, but the numbers do reflect a shrinking budget. For the 16 campuses of the University of North Carolina, the year-over-year cut will be $40 million.

The budget cutting could get larger if Congress fails to provide additional Medicaid help to the states. North Carolina had expected another $500 million by January. Now Congress looks like it will scale the money back, or not provide it all.

So, legislative budget writers had to put together a contingency plan. It calls for another 1 percent across-the-board cut to state agencies and a 1 percent reduction in Medicaid provider rates if the money from Washington doesn't flow. And a scheduled $160 million contribution to the state pension fund would be reduced to $21 million.

Cowell wasn't pleased with the provision, saying legislators had put the state on a path to substantially underfund the pot of money responsible for paying state retiree pensions.

The budget plan also irked the private-sector workers who depend on Medicaid dollars to provide in-home care to the elderly, help that includes dressing, bathing and cooking. Budget writers revamped the program, eliminating services to about 18,000, after reviews found that many people didn't qualify.

There was one other group that didn't look happy as legislators debated the $19 billion budget bill - the spending rising to $20.6 billion when accounting for federal stimulus dollars. Legislative Republicans, in overwhelming numbers, voted against the bill.

Mostly, the Republicans railed against a spending plan that puts off tough decisions until next year, when that $1.6 billion in federal stimulus money will be gone and when $1.3 billion in taxes adopted in 2009 as "temporary" will expire.

But away from the House and Senate floors, the Republicans weren't angry either. They like their prospects in the fall election. Their rhetoric, including one legislator calling the budget bill "legislative malpractice," fits their mission.

As for those tough decisions being put off, isn't that the way of government? The only question is, who will be making the decisions, and can they put them off even longer?

Scott Mooneyham writes for Capitol Press Association in Raleigh. Contact him at smooneyh@ncinsider.com.