Local Politics

Supreme Court: Using highway money to balance budget was illegal

Posted October 8, 2010

— A divided North Carolina Supreme Court on Friday let stand an earlier ruling that found shifting money from special funds to help balance the state budget to be unconstitutional.

The ruling doesn't carry the weight of legal precedent, but it could impact budget negotiations next year, when North Carolina faces a projected $3 billion deficit. It also doesn't preclude lawsuits involving other recent shifts of funds to cover state deficits.

The case stems from former Gov. Mike Easley's decision in 2002 to raid various funds for $1 billion to help cover a mounting deficit. Included in those funds was $80 million from the Highway Trust Fund.

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.

A Wake County judge dismissed the case two years ago, 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 overturned that decision last fall, ruling that Easley needed legislative approval to transfer money to the General Fund.

The Supreme Court split 3-3 in its decision, with Associate Justice Patricia Timmons-Goodson recusing herself from consideration of the case because she had heard it as a member of the Court of Appeals. The split leaves the Court of Appeals ruling intact.

The appellate ruling doesn't carry the weight of a legal precedent in the state – it applies only to the Easley case – so lawsuits over other money shifts could be decided differently in the future.

“It is a wash. It is basically no decision,” said former Chief Justice Burley Mitchell, who argued Easley's case before the Supreme Court.

A lawyer for Harrington and Goldston argued, however, that the ruling will make governors think twice before taking money that the legislature specifically has set aside for a dedicated purpose.

“The governor cannot just come in and willy-nilly siphon from one account to fill out another, said Jeanette Doran of the North Carolina Institute for Constitutional Law.

Gov. Beverly Perdue twice took money from special funds last year 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.

Her office issued a statement Friday saying governors should be able to move money to balance the budget.

"The executive branch has believed all along that governors have the duty under the state constitution to take the steps necessary to address an economic crisis and balance the budget," Perdue spokesman Mark Johnson said. "The primary commitment to the people of this state is that we have a balanced budget, and the Office of the Governor needs all of the tools available to make that happen.”


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  • Sherlock Oct 11, 2010

    She is above the law, so NC get over it and just pay the taxes as they are raised.

  • ncwiseguy Oct 8, 2010

    mike needs go to go jail

    enough said

  • fl2nc2ca2md2nc Oct 8, 2010

    I applaud this decision. We all knew it was wrong. We'd probably have the money for the 540 loop, without tolls, had they not stolen this money. Brings a whole new meaning to highway robbery...

    Rev, you stole my thunder. How many people know that the "education lottery" doesn't add a thing to the schools' budgets since they simply take an equal amount out of the general budget for education each year? So sick of the corruption...

  • Big Mike Oct 8, 2010

    Rob Peter to pay Paul......what else in new?

  • chrisbrown397 Oct 8, 2010

    Former Justice Mitchel say a it's "a wash"! His eyes need washing out.

    The Constitution authorizes a Governor only one power - when the Legislative Branch and the Executive Branch screw up the state budget by appropriating more in expenditures than is being collected in revenues, Art. V, 3, (5) says only "effect the necessary expenditures" and thereby balance our budget.

    My high school student can read that with no trouble.

    Let one more judge, politician or governor say that does not mean "cut expenses, and he or she should never be elected again. Stealing money from a "trust fund" would put an ordinary citizen in jail. Governors and judges can go to jail too.

  • Adelinthe Oct 8, 2010

    How about using the EDUCATIONAL Lottery money to do essentially the same thing???

    (Like Bev has done.)

    God bless.


  • elcid liked Ike Oct 8, 2010

    Good. Excellent decision and quite overdue.

  • etshoney Oct 8, 2010

    It is not up to the Governor to balance the budget by taking funds specifically allotted to various organization by the Legislature. THE GOVERNOR SHOULD GET PERMISSION FROM THE LEGISLATURE DO THAT! Sure the budget has to be balanced but the Governor is not GOD. We elected people to represent us in various districts throughout the state and that is THEIR JOB not the Governor. These power hungry pols need to realize that they are LIMITED IN THEIR POWER FOR A REASON! Try cutting commissions and study groups and salaries and travel and restaurants and limos etc...... I think we have a better chance influencing our representative than the Governor when it comes to cuts.

  • FairPlay Oct 8, 2010

    This is what straight ticket voting causes. Bev just won by a few percent due to the Obama ticket. Next time people need to make the right choices and break this good ol boy system.

  • wildcat Oct 8, 2010

    Purdue she made a wise decision and got caught doing something illegally. We need a new governor.