Local Politics

Perdue orders more cuts, digs into other funds

Posted February 25, 2009 4:49 p.m. EST
Updated February 25, 2009 10:05 p.m. EST

State budget

— Gov. Beverly Perdue ordered state agencies Wednesday to cut another 2 percent from their spending this year and transferred $300 million from various funds to create an emergency account for state operations.

“The state constitution requires that I balance the state budget, and I will do that while protecting public education as much as possible,” Perdue said in a statement.

Fiscal analysts have projected the state budget deficit could hit $2 billion this year and could surpass $3 billion in the 2009-10 fiscal year.

The additional cuts mean agencies now have to reduce their spending during the 2008-09 fiscal year by 9 percent. The size of the cuts has been rising steadily since former Gov. Mike Easley ordered 2 percent cuts in September.

Perdue is using $100 million each from the Clean Water Management Trust Fund and the Public School Building Capital Fund and $50 million each from the Education Lottery Reserve Fund and the Public School Textbook Fund to set up an emergency reserve for state operations.

The state faces a cash-flow crunch every spring until corporate income tax payments are made on April 15, officials said. The emergency fund would help cover expenses until then, they said.

The fund transfers would be managed so existing activities supported by the special funds wouldn't be impacted, officials said.

Wake County officials said the money diverted from the education funds will have no impact on the county budget.

The state Department of Public Instruction told school districts to turn back as much money as possible to the state, saying it would make more money available to schools in the 2009-10 fiscal year.