Raleigh, N.C. — Gov. Mike Easley has asked state agencies to cut their 2008-09 budgets by 2 percent in case the sluggish economy and the current financial crisis cut into tax revenue next year.
State Budget Director Charles Perusse issued a Sept. 17 memo to request the cuts, saying Easley doesn't want to handcuff his successor with a deficit. When Easley came into office in 2001, he had to make swift budget cuts to keep pace with declining revenue in a slow economy.
"We are not immune from the nation’s economic slowdown and are implementing measures now to give as much time as possible to manage a revenue shortfall should it arise," Perusse said in the memo.
A 2 percent cut to the $21.4 billion state budget approved in July amounts to about $420 million. The savings will be lower than that because public schools, Medicaid and state entitlement programs will be exempt from the cuts.
Easley said in a telephone interview with WRAL News that the cuts are purely a precaution. Agency officials have said they should be able to make the cuts without affecting services, he said.
"What I want to do, given all this economic uncertainty, is make sure we hold back money just in case there's a shortfall," he said. "I'd rather have (the money) and not need it than need it and not have it."
State agencies will have the discretion to make cuts where they see fit, but the Office of State Budget and Management recommended that they leave open positions vacant, limit travel and delay major purchases.
Perusse said state budget forecasts call for a slow start to 2009 and stronger economic growth later in the year. Budget officials will continue to monitor the situation through the end of December and will adjust strategies as needed, he said.