Local Politics

Easley seeks more options for budget cuts

Posted December 10, 2008

— Gov. Mike Easley on Wednesday asked state agencies to draw up a list of cuts to reduce their budgets by 3, 5 or 7 percent because of the continuing slowdown of tax revenue collections.

"The nation lost over 530,000 jobs in November, which means North Carolina's unemployment rate will spike this month," Easley wrote in a memo to department heads. "Reducing agency expenditures will be an essential component of providing a balanced budget to Governor-elect Perdue and the General Assembly."

Easley two months ago called for 2 percent budget cuts, saying the national economic crisis was crimping the state's sales tax and personal and corporate income tax revenue. He later warned departments that cuts could reach 5 percent.

Fiscal analysts have said the state budget deficit could top $1 billion in the coming months, and some have projected a $3 billion deficit for the fiscal year that starts next July.

A 7 percent cut could reduce state spending by more than $1.5 billion.

Easley wrote in his latest memo that 75 percent of the proposed cuts should be for recurring expenses, not one-time costs. Agencies also can't use cuts to capital projects to reach the 3, 5 or 7 percent marks, he said.

"Whenever you spend money on a capital improvement ... for every $1 million (spent), you create 36 jobs," Easley said in an interview with WRAL News. "Anything like that, we want to get it out there (and) get the jobs created, and these buildings and roads are necessary anyway."

Funding priority should be given to mandated or "core mission" services, he said, and agencies should look to eliminate underperforming programs, consolidate offices and services, reduce layers of management and save money through efficiencies.

"The main thing we're asking ... is hold onto your services," Easley said. "Those services go directly to people, that people need, we don't want to cut those."

He also said classroom-related spending on public education wouldn't be sacrificed.

North Carolina State University Economist Mike Walden said Easley’s move to try to reduce spending is an unfortunate necessity in these lean times.

“The government gets its revenue from the private sector. So, if the private sector’s economy is doing poorly then the government’s revenue isn’t going to do as well,” Walden said.

The proposed cuts are due to the Office of State Budget Management by Jan. 14, a week before Perdue makes her first budget recommendations to state lawmakers. She takes office Jan. 10.

"Our vision cannot be singularly focused with an outlook toward today's immediate issues, but must be forward-looking for the long-term good of state government," Easley wrote in his memo. "Those of us who have led state agencies for the past eight years are in the best position to create options for the incoming administration."

A proposed federal stimulus package to help states will take time to generate revenue for North Carolina, Easley said. He said the state budget could be helped more quickly through Medicaid relief.

"It would be nice to have about $400 (million) to $500 million of that coming to us. It would give us a bit of breathing room," he said.

Walden said the brunt of the recession will be felt the first part of next year. Some economists believe the economy could shrink by 3 percent or about $4 billion.


This story is closed for comments.

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  • demo7691 Dec 11, 2008

    Thanks for the update. If this is true then I stand corrected. Can you answer how much the state pays on thier other house. (including water, power,office, Etc... Wondering if the state pays for a office there for the troopers who guard him or does he just allow this.

  • computer trainer Dec 11, 2008

    ratherbnnc, sorry, but your news is incorrect. Easily and the missus do live in the Gov Mansion. He did not want to and stated that he would not right after his first election, BUT got a lot of flack, because people felt he was being disrespectful. They did have not move out temporarily when there was some work being done on the Mansion. Cannot remember exactly what kind of work, but they could not stay in there then.

    Stormy13, You are SO RIGHT about about them not "cutting" the do nothings. I cannot believe that they think that we are all so stupid that we do not know what is going on.

  • Stormy13 Dec 11, 2008

    computer trainee: I also am a State employee and I agree completely with everything you said! If layoffs are to be, start at the TOP, get rid of two of the three positions that ONE individual at the top can handle. There is so much waste in State Government, when "cuts" are required they never get rid of those indiviuals that cost the State the most for doing nothing.

  • superman Dec 11, 2008

    It was an iffy suggestion-- cut the budget by 3, 5 or 7 percent. What agency is going to cut 7 percent when 3 is an option? Wake up gov -- you dont even know what you need or want.

  • ghimmy51 Dec 11, 2008

    NC state departments have suffered from "Ain't we pro-itis" for decades. As the amount of work to be done increased 400% the numbers of people actually doing the work shrank to 10%. People were forced out by any means necessary as recent graduates occupied positions where they simply bloated the books without actually knowing how to do anything. Departments have been mainly concerned with preserving and expanding the departments by bloating the books for too long. As a start fire the dead wood and get the ex-employees back from consultant engineering firms. Let the state do it's OWN work again. And another thing ... stop the late June panic to spend what's left of department budgets. They believe if they don't spend it all their budget will shrink next year.

  • bs101fly Dec 11, 2008

    how about your wife give back that raise she got????
    how about you both leave town NOW!

  • ratherbnnc Dec 11, 2008

    I would like to know what "capital projects" are so important that it would be more worthwhile to hick taxes than to just delay the projects.

    Like the Green Square Project in downtown Raleigh.

  • thecatsmeow Dec 11, 2008


    9/12/08 UNC Board of Governors approves pay raise for first lady.

    9/25/2008 Easley orders budget cuts.

    .....Interesting timeline and the fact that he will be losing his governmental powers very shortly.

  • ratherbnnc Dec 11, 2008

    Wow just saw the state paid 15 people 3 days work to decorate the Gov mansion for christmas. Im for Christmas and espescially what it stands for but I can imagine that every family had to cut back this year except the ones spending public money. Want to guess how much they spent on that. I guarantee the Easleys didnt pay for that even though they live there. demo7691

    Not sure where you get your info from, but the state did not pay 15 people to decorate the mansion. The Mansion is decorated every year by volunteers. The decorations were donated or grown.
    Also, the Easleys do not live in the mansion. They have their own home in Raleigh. The last Governor to halfway live in the Mansion was Hunt, and that was very seldom. He commuted from Wilson County. Even though i am not an Easley fan, i will have to set the record straight on this one.

  • demo7691 Dec 11, 2008

    Wow just saw the state paid 15 people 3 days work to decorate the Gov mansion for christmas. Im for Christmas and espescially what it stands for but I can imagine that every family had to cut back this year except the ones spending public money. Want to guess how much they spent on that. I guarantee the Easleys didnt pay for that even though they live there. If easley was set for saving money for the state he wouldnt do such. Now tax payers get ready to spend a million or 2 on the inaguration parade and ball for Purdue who is going to spend it just as fast if not fatser than the Easleys. Just in state employees working ad preparing would be a million probably. I guess she will start poor mouthing how broke the state is once they pay the bills of her party and want you to give more. Please stop wasting our money politicians.