McCrory: NC won't feel immediate hit from federal cuts

Unless Congress acts by Friday, $85 billion in across-the-board cuts are set to take effect.

Clearly frustrated by Washington, D.C., politics, McCrory said automatic cuts is no way to budget. He said he saw plenty of negotiations to avoid the cuts while in the nation's capital over the weekend for a meeting of the National Governors Association, but he isn't optimistic.

"Maybe, if we get lucky, something will be resolved between now and Friday, but I frankly do not see that happening," he said.

North Carolina has already allocated most of its federal funds through June 30, he said, meaning any hit from the cuts will occur later.

"We do not anticipate a major change between now and the end of our budget year," he said. "So, we do not see any potential layoffs between now and the end of the school year for teachers."

After that, however, all bets are off, and there could be classroom cuts if the so-called sequestration continues.

"We will have to find some money to fill in some gaps" in programs such as Head Start, the governor said.

McCrory said he believes the White House has underestimated the sequestration's impact on North Carolina's military. The administration has said 22,000 to 23,000 civilian Department of Defense employees would be furloughed, reducing gross pay by more than $100 million.

"We actually see that number not being 23,000 but actually 29,000 employees," he said.

The Governor's Office estimates an immediate $6 million decrease in state income tax collections, which McCrory said would have a minimal impact.

If the sequestration lingers into the summer, he said, the negative impact would likely trickle down to every North Carolina county.