Budget Impasse Could Cost Up to 1,000 Jobs

Up to 1,000 state workers and employees of nonprofit groups could be out of work next week because there will be no state money to pay their salaries, state officials say.

``This is a serious problem,'' Gov. Jim Hunt said Wednesday at a joint meeting of his cabinet and the Council of State. ``A lot of rank-and-file state employees are involved in this.''

About 500 to 600 state workers in programs that will run out of money Sunday will not have a paying job when the fiscal year begins Monday, state budget officer Marvin Dorman told department heads.

Employees of nonprofit groups that depend on state funding ``may push the number up to 1,000 individuals that come Monday will find themselves without funding,'' Dorman said.

A law passed in 1985 will keep state agencies from using other funds, such as salaries from vacant jobs, to pay them, he said. The law specifies that state agencies cannot use other available money in their budgets to pay for items that legislators have considered, but not funded.

The law was intended to keep agencies from diverting money to projects legislators had rejected.

Lawmakers adjourned the legislative session at midnight Friday without a revised budget after negotiations between House Republicans and Senate Democrats broke down.

This morning, Hunt conducted a conference call with legislative leaders regarding a possible return to Raleigh to settle the budget squabble, said Hunt aide Wayne McDevitt.

Meanwhile, a Senate Republican said today he was convinced by hearing from voters in his Wake County district that lawmakers should return to finish their budget work.

The need to hire teachers for the 12,000 new students expected to enter the North Carolina schools this fall is one of the issues that ``will need immediate resolution,'' said Sen. Henry McKoy.

Trustees at North Carolina Central University issued a letter Wednesday demanding the General Assembly return to provide money needed for projects that include clearing up fire and safety code violations.

State personnel director Ron Penny said it was unclear if workers affected by the stalemate could come to work Monday, even if they volunteered to work without pay in hopes the Legislature would return, pass a budget and make their pay retroactive.

The state could face liability if they were injured on the job, and they would be using state supplies and resources, he said.

Other officials questioned whether affected employees would lose their health care or retirement benefits.

``We realize a lot of state employees are making $25,000 to $30,000 a year, and if they're laid off for a month, it could cost them their homes,'' Attorney General Mike Easley said.

State Treasurer Harlan Boyles said he was forced to add extra people and an evening shift in his office just to answer questions from state employees frustrated by the stalemate that left them with no pay raises and considering retirement.

``That tells me we're just before losing a lot of good people,'' Boyles said.

Commerce Secretary Dave Phillips said he had been in contact with corporate officials the state has been trying to attract.

``I can tell you ... our reputation has been tarnished, not only in this country, but around the world,'' he said.

``We are at a very important crossroads in terms of the economic development of North Carolina,'' he said.

Others at the meeting outlined state projects threatened by the lack of a revised budget. Those programs ranged from more money to rent out-of-state beds for overcrowded prisons to implementing new domestic violence programs.

Hunt, who has the authority to call legislators back into session, again hinted he might take that action.

``It's obvious we have a critical problem in our state,'' Hunt said. ``This just will not do. This is not right to make the people of North Carolina go through this.''

After meeting with his education cabinet Tuesday, Hunt said legislators should return to town and pass a budget. That drew an immediate response from Rep. Robin Hayes, his Republican opponent for governor, who suggested that legislators return to town on their own and that the House make a bare-bones offer that the Senate already has rejected.

Hunt said Wednesday just offering a spending plan is not enough.

``We have to make sure that if the Legislature comes back that they just not pass a budget, but a good budget,'' he said, ``one that addresses the state's needs in education and the environment.''

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