Local Politics

Court: Easley wrong in using highway money for budget

Posted September 15, 2009

— In a decision that could affect how future state deficits are handled, the North Carolina Court of Appeals ruled Tuesday that former Gov. Mike Easley unlawfully used state highway money in 2002 to balance the state budget.

To deal with a state economy reeling from the combination of the dot-com bust and the Sept. 11 terrorist attacks, Easley raided various funds in February 2002, seizing $1 billion to help cover a mounting deficit. Included in those funds was $80 million from the Highway Trust Fund.

Road Funding Judges say lawmakers must approve shifting funds

Two men who helped create the Highway Trust Fund in the late 1980s, former Transportation Secretary Jim Harrington and former state Sen. W.D. Goldston, an Alamance County Democrat, sued over the move, saying money raised through gas taxes that goes into the trust fund is earmarked for specific highway projects.

"They felt the taxpayers were being cheated here," said Dan Boyce, an attorney for Harrington and Goldston.

After getting bogged down in the courts for several years on procedural questions, a Wake County judge last year dismissed the case, ruling that Easley is constitutionally required to maintain a balanced budget, so he had the authority to use highway money in the face of a deficit.

A divided Court of Appeals, however, overturned that decision, ruling that Easley needed legislative approval to to transfer money to the General Fund.

"One cannot deny that a governor acting alone is more efficient and practical in addressing a deficit or any problem. Our constitutional history in government, however, has chosen to employ separate, divided powers to address governance, including the allocation of tax revenue through the budget," Judge Robert N. Hunter Jr. wrote in a decision supported by Judge Barbara Jackson.

"There's a lot of reasons politicians like to shift money, and hopefully this will stop that practice to some degree," said Berry Jenkins, manager of highway and heavy construction for Carolinas AGC, a trade group that represents general contractors and construction firms statewide.

The judges said the transfer of highway money didn't resolve the deficit because it neither reduced spending or increased revenue.

"Temporary halts in expenditures, escrowing of funds awaiting legislative action, furloughs and other similar actions are constitutional because these actions reduce 'total expenditures.' Diverting the Highway Trust Fund to the General Fund and expending the money does not reduce the 'total expenditure' of state government but merely transfers money contrary to the budget appropriation statute," Hunter wrote.

In a dissenting opinion, Judge Linda McGee wrote that such a narrow interpretation of the state constitution would hamstring governors from acting quickly to plug a deficit.

Gov. Beverly Perdue twice took money from other funds last spring to help pay state bills amid a deficit, including the lottery reserve fund, the Clean Water Trust Fund and the public school building and textbook funds.

Bob Orr, a former state Supreme Court justice who now director the North Carolina Institute for Constitutional Law, said he believes Perdue faces a potential lawsuit because of her actions.

"We have actually been looking at that issue," Orr said. "I think this case clearly says she does not have the constitutional authority to do that."

Perdue said she was surprised by the ruling and said she expects it to be appealed to the Supreme Court.

All three appellate judges agreed that a legislative transfer of $125 million from the Highway Trust Fund in 2002 was constitutional.


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  • chfdcpt Sep 15, 2009

    The Fox, remember who was Governor when Easley lost the cases of taxing federal retirees and 401k type accounts? It was dear Jim Hunt, who decided to tax those, so he could fund some pet projects.

    He is also the one who refused to use the surplus NC had during the flods from hurricane Floyd and then wanted to blame FEMA for all the problems.

  • starshield Sep 15, 2009

    This cannot be true. A democratic leader misusing taxpayer money. I have never heard of such a blatant lie. Look at ACORN, they have never broken the law.

    Is this really news? Well at least not enough to do a real story on it.

  • Adelinthe Sep 15, 2009

    I'll say it again, Bev has done the same thing - raiding the Golden Leaf Fund and the NC Educational Fund to balance the state budget.

    Why aren't those investigating Easley looking into her financial shenanigans as well???

    God bless.


  • ERRN Sep 15, 2009

    I like how they say "seizing the money" How about calling what it is, STEALING"

  • taurismo Sep 15, 2009

    Is there really anyone out there who didn't know this already?

  • me2you Sep 15, 2009

    Yes, didn't Bev Purdue do something similar with the NC Education Lottery to balance the budget? Hmmm!

  • dewnit4fun Sep 15, 2009


  • jet2rdu Sep 15, 2009

    There seems to be more and more bad news for the Easleys lately. Lets make this right. How about a scratch off NC Lottery Ticket to benefit and reimburse the Highway Fund? Let's call it the "You Scratch My Back I'll Scratch Yours" instant win scratch off game.
    We can use silhouettes of some of favorite Jones Street politicans, past and present as the symbols to scratch off.

    Just don't let Gov. Perdue use the profits for something other than improving NC roads.

  • Alabama01 Sep 15, 2009

    Take him down ..
    downtown that is ..
    book'em Daniel..
    issue him one soap on a rope.

  • lkanzig Sep 15, 2009

    might as well start on bev or they just going to wait until she is out of offic and slap her hands like they did easley?