Local Politics

State agencies wince over additional cuts

Posted August 17, 2009 12:10 p.m. EDT
Updated August 17, 2009 6:59 p.m. EDT

— Already smarting from cuts in the new state budget, state agencies on Monday were trying to come to grips with Gov. Beverly Perdue's order that they cut another 5 percent from their annual spending.

Late Friday, Perdue issued an executive order mandating the 5 percent across-the-board cuts. The order came a week after she signed the $19 billion budget that included more than $2 billion in cuts and almost $1 billion in new taxes.

"This is just frugal management, managing cash flow," Perdue said Monday. "We need to be good stewards, and we need to know we have the resources available to pay the bills, and that's what this allows me to do."

The additional money from a one-cent increase in the sales tax rate and an income tax surcharge that were included in the budget won't flow into state coffers for a few months, officials said. So the money held back from state agencies will be put into a reserve account to ensure that the state has enough cash on hand in the coming months to pay its bills.

The 5 percent cuts would save about $473 million, according to figures compiled by Perdue's office.

About $75 million of that total will come from the Department of Health and Human Services, which is still trying to absorb about $900 million in budget cuts. DHHS Secretary Lanier Cansler said the additional cuts ordered by Perdue will be especially painful since most of the department's budget is tied directly to patient care.

"When we're talking about taking 5 percent additional, we can't take it out of administration," Cansler said. "If we tried to take it out of administration, it will be difficult to manage the programs. So we have to look for ways to be smarter (and) be innovative."

The University of North Carolina system will have to cut $125 million, and the North Carolina Community College System will have to cut $47.5 million.

Public schools are exempt from the additional cuts, as are Medicaid and the State Children's Health Insurance Program. Public safety programs were asked to cut spending by 4 percent instead of 5 percent.

Capt. Everett Clendenin of the state Highway Patrol, said the 4 percent cut will still hurt the agency.

"We're going to have to tighten our belts that much more," Clendenin said, adding that the cuts wouldn't affect the number of state troopers patrolling North Carolina highways. "One thing the governor made clear (is) she's not going to compromise public safety."

Republican leaders quickly jumped on Perdue's cuts, calling it "erratic decision-making" after agreeing to a budget that raised taxes and cut spending.

"Gov. Perdue is admitting that her budget was out of balance," Senate Minority Leader Phil Berger said in a statement. "As North Carolinians continue to endure record unemployment, we need strong, consistent leadership from the Governor’s Office, not erratic decision-making and a failure to meet constitutional requirements followed by political spin.”

Perdue dismissed the criticism as mere politics. If the economy rebounds and tax collections improve to the point where the money in the reserve account is no longer needed to manage the state's cash flow, she said, all money left in the account would be released to state agencies.