Zebulon Town Manager Rick Hardin said the state's budget problems have filtered down to small towns, leaving them with some bad choices.
"We're looking at things like cuts in services, tax increases or other fee increases. Potential layoffs of employees is the worst case scenario, so those are all pretty lousy choices."
One example of budget cuts in Zebulon is a new baseball field. The field will be finished later in the spring, but there is no money for bleachers or lights.
Ellis Hankins, executive director of the North Carolina League of Municipalities, said the budget squeeze has put pressure on every town and county government in the state.
"They are all in the process of recommending budgets for the next fiscal year that begins July 1. They don't have any earthly idea how to do that. They don't know what money to count on," he said.
Gov. Mike Easley, who is holding around $200 million in local government money, said he wants to be able to give the money back. He has said he will gauge his decision on revenue figures on the economy due later this month.