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Governor cuts pay, calls for furloughs for state employees

Posted April 28, 2009

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— In an effort to close the gap on a state budget shortfall $1 billion more than originally expected, Gov. Bev Perdue on Tuesday ordered a half-percent pay cut for all state employees and teachers.

The pay cuts, for May and June, will save an estimated $65 million, a relatively small amount, she said, compared to the expected $3 billion-plus shortfall for the current fiscal year, which ends June 30.

Governor orders state employee pay cuts Governor orders state employee pay cuts

That means state workers earning $30,000 a year could expect to see their monthly May paychecks cut by $75, followed by another $75 cut in June.

The executive order, signed Tuesday morning, calls for full-time employees to take 10 hours off in return, what the governor called "flexible furlough," between June 1 and Dec. 31.

"Therefore, when an employee takes their time off, their pay will not be deducted any further beyond the 0.5 percent taken this fiscal year," the governor's office said in a statement Tuesday afternoon.

Acknowledging the order was not well written, the governor's office had to clarify twice Tuesday afternoon what it meant.

Groups representing teachers and state workers said they expected possible salary hits next fiscal year but were surprised by Perdue's announcement.

"We're a bit disheartened by it, and we're hoping that we'll be able to stave off any further furloughs or cuts as we go down the line," said Dana Cope, executive director of the State Employees Association of North Carolina.

The governor also identified funds to close the remaining budget gap for the fiscal year, which include capturing $200 million in special funds, tapping the state’s Savings Reserve Account for up to $350 million and utilizing $400 million in federal stimulus funds.

"The world is not ending," Perdue said at a news conference. But she acknowledged that, "these are solutions that may be distasteful to our people."

The cuts come on top of moves she had already taken to close a $2.2 billion gap between income and planned state spending. Perdue has cut state agency spending by up to 9 percent, and tapped at least $550 million from reserve funds.

Perdue said Tuesday she was acting under her constitutional obligation to balance each year's state budget.

Although Perdue cannot impose salary cuts on elected officials such as lawmakers and judges, she said she had asked Chief Justice Sarah Parker and legislative leaders to take voluntary pay cuts.

Perdue said she would cut her own pay. House Majority Leader Hugh Holliman, D-Davidson, confirmed legislative leaders would accept pay cuts. The state constitution bars governors from changing the salaries of elected officials during their terms.

"Everybody is willing to give up a little of their salary," Perdue said.

Perdue said she decided on an across-the-board salary cut after legal advice that it was the option most likely to sustain a legal challenge. Her office said she would ask the General Assembly to pass legislation specifying that the pay cuts would not affect longevity pay, retirement or other benefits.

The federal stimulus money Perdue will spend in the next two months comes from a fund designed to allow states to avoid deep layoffs as they confront budget shortfalls.

The governor's proposed budget for the two years beginning July 1 recommended spending the $1.4 billion evenly over the two-year span. Instead, Perdue decided Tuesday to spend $400 million of that now, State Budget Director Charles Perusse said.

Perusse said the total spending gap for the current budget year could wind up between $2.8 billion and $3.2 billion, and the eventual amount would sway how much of the state's reserve funds are used.

But Perdue wants to set aside about $200 million to cope with emergencies like a summer hurricane or disease outbreak, he said.

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  • nufsaid Apr 30, 2009

    "Old Firehorse-
    Those particular coworkers either have their Master's or are National Board certified. And all of the ones who told me that have been teaching for more than 15 years. I also live in an area where the housing prices are not completely insane, Thank God. My mortgage payment is only $500 a month. I haven't been teaching as long as them, but it is conceivable to me that they could be losing that much or a little more with their higher pay.
    It is just a really low blow to have all of your pay cut for the entire year taken out of one paycheck.
    Click to view my profile NCTeacher"

    Half of 1 percent of $100,000 is $500. The more you complain the more sympathy you lose.

  • NCTeacher Apr 30, 2009

    Old Firehorse-

    Those particular coworkers either have their Master's or are National Board certified. And all of the ones who told me that have been teaching for more than 15 years. I also live in an area where the housing prices are not completely insane, Thank God. My mortgage payment is only $500 a month. I haven't been teaching as long as them, but it is conceivable to me that they could be losing that much or a little more with their higher pay.

    It is just a really low blow to have all of your pay cut for the entire year taken out of one paycheck.

  • prn13norm Apr 30, 2009

    Hey teachers and state employees do you know that the NC stimulus money is going to give raises to the Smart Start and More at Four staffs. I did not think you did!

  • Nonewsisgoodnews Apr 30, 2009

    Just so everyone knows, no one in my family working for the State has EVER made over $50K a year working in the State their entire lives.

  • Nonewsisgoodnews Apr 30, 2009

    I'm a first year teacher straight out of college with 28K alone in loans that had to be taken to get me here. My mother teaches, my Dad is DOT, my grandparents retired Bus maintenance and Cafeteria worker, my aunts principles. If it seems like I have connections, I didn't use them at all to get where I am today and those loans show that my family couldn't fully afford to send me to college. I'm on terminating contract because I was hired straight out of college and my certification had not arrived from DPI (official transcript sent, 3 months waiting on DPI, the whole drill). I see both sides of the story, as I also think some State works do not do a great job and some do above and beyond. My job seems more and more likely to be gone after June, I like to believe I do a decent job too. The pay cut and furlough doesn't bother me, but I know my family will feel a great deal of pain. Sorry to all the state workers out there. I hope this helps everyone in this position now.

  • her3me24 Apr 30, 2009

    Hummm i think there are a few government appointed positions that could also go...how about the Superintendent appointed over the elected Superintendent of Schools....get rid of the redundancy. No more "studies" that cost thousands to find out if we can go ahead with a plan. What happened with state employees doing the research themselves? She is a complete failure. Typical of Democrats. Cut the buget where it doesnt need to be cut...I mean we have to keep the government side of it intact right??

  • oldfirehorse Apr 30, 2009

    wifemomteacher~ You're going to have a premature stroke if you listen to these state worker/teacher bashers in here. Don't worry though, when the ugly head of this depression turns on them, you won't hear much from them anymore, except to whine. What's most scary to me is the governor (if you can call her that) and the legislators appear to be in concert consistently on these issues. But, they too, will learn that it's a double edged blade when they start maliciously mishandling their employees. This little stunt with the governor ordered, retroactive, pay cut, affecting both exempt and non-exempt employees is, in my opinion, just testing the water to see what she can get away with; still to be proven on a number of issues whether she has the legal authority to do this. The precedents being set are what everyone should pay attention to. The deal with the health plan is a great example of something that will come back to bite everyone, not just state employees.

  • CTR Apr 30, 2009

    I wonder if the "honorable" governor and her staff took a cut in pay as well? hmm ???

  • Citizen7265 Apr 30, 2009

    Yes, I teach. I realize how many typographical errors are in my previous posts. Emotions are very strong, and I did not proofread carefully before posting. So for all who want to make snide remarks about the errors, go right ahead. It is deserved.

  • whiffleball Apr 30, 2009

    There are a lot of assumptions here and undeserved accusations towards state employees.

    The point isn't the size of the cut or the amount of furlough. The point is why this governor feels the average state employee should bear the burden of debt relief when the vast majority of them are not in positions to make the policies that led to the debt.

    The person who got the state employee insurance fund into a total wreck due to incompetence should be bearing some of the cost to alleviate the trouble he caused. Is he? Doubtful.

    Political appointees should be the first to suffer and be RIFd before this day is out.

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