Perdue: 'Everything on table' for cutting deficit

"Everything is on the table," Perdue said in her first State of the State address. "We don't have time for talk-show political posturing or petty partisan games."

The latest projections call for the state budget to be in a $2.2 billion hole by June. Lawmakers will face a deficit of at least $3 billion as they craft a budget for the 2009-10 fiscal year that starts in July, according to fiscal analysts.

Perdue has ordered state agencies to reduce their spending by 9 percent, and she said more cuts would be recommended when she presents her proposed budget next week.

"'Cutting the fat' is a cliche that does not go far enough," she said. "We will reduce and cut state government programs and services that many, including me, know have been effective but which, in these times, we simply cannot afford."

While not providing specific details about how she would balance revenues and spending, she outlined several priority areas for state funding.

"I will do whatever it takes to pay our state's bills; keep our kids healthy and in school; make sure that, when our seniors need care, they can get it; keep prisoners locked up and our people safe; and create jobs and provide ways for those who are out of work to learn new skills," she said.

Almost 400,000 North Carolina residents were unemployed in December – a record number – and the state's 8.7 percent unemployment rate is the highest in a quarter century.

"Families around the state are anxious," Perdue said. "Many have lost their jobs. Many have lost their homes. As I travel around this state, I see the uncertainty and worry in the eyes of North Carolinians."

Senate Minority Leader Phil Berger said Perdue and lawmakers cannot add to those worries by raising taxes.

"State government should not take action that fixes the state budget and harms and ignores the family budget," Berger, R-Rockingham, said in the official Republican response to Perdue's speech.

Berger criticized recent state budgets, which he said increased spending by 50 percent and doubled state debt in six years. The state now spends $53 million each day, he said.

"The current economic situation is an opportunity to get North Carolina's financial house in order," he said.

The governor said she would continue to chase funds from the $787 billion federal stimulus. She has expressed disappointment with North Carolina's initial $6.1 billion share of the spending package and has talked with President Barack Obama and officials in his administration about securing more.

"We must go after every federal recovery dollar that is available. We need to get that money into North Carolina," she said. "But we can't rely on the federal government alone. we must do whatever it takes, on our own, here in North Carolina, to create jobs, help displaced workers get new jobs and keep families in their homes."

Even with the deepening deficit, Perdue said, the state cannot afford to cut back on education spending. She said her budget would increase per-student spending for the 2009-10 school year.

"Education is the engine that propels North Carolina's future. It cannot – and will not – be sacrificed," she said.

At the same time, she called for "some sanity to North Carolina's own testing mania" and said more technology needs to be introduced in public schools to engage more students. She also pushed for College Promise, a program designed to help make college more affordable to more state residents.

"My efforts create a pathway, starting in pre-kindergarten, that offers courses of study that fit students' needs," she said. "Seamless learning, pre-K through (grade) 20, that's the goal."

Perdue said the sacrifices the state faces in the coming months won't be easy, but she urged lawmakers to act courageously to lead North Carolina into a brighter future.

"It is time for the ordinary citizens in this citizen legislature to be extraordinary leaders," she said. "Simply getting our economy back to what it was isn't good enough. We will make our economy stronger."