Financial Woes Require Fast Action From Easley

North Carolina is facing a budget deficit of almost $500 million only halfway through the fiscal year.

UNC-Chapel Hill political science Professor Thad Beyle said Easley's term will be different from previous governors because he is starting out with a deficit.

Beyle said Easley must deal with the state's fiscal woes in the first six months or it could get worse.

Rep. Ruth Easterling, D-Mecklenburg and co-chairwoman of the House Appropriations Committee in the N.C. General Assembly, said increased health care expenses largely contributed to the deficit.

"Look at the percentages in the budget -- education takes about 66 percent and health and human services takes 17 percent," she said. "You add it up and the other organizations get what's left."

Easterling cited health care services such as the Children's Health Insurance Program as contributors to the budget deficit.

"We thought the program would help 71,000 kids, but we underestimated," she said. "We reached that number only halfway into the year, which increased expenses."

The UNC system faces potential problems from the budget deficit as well. Jeff Davies, UNC-system vice president for finance, said the projected amount of money received by the system during the next few years is an important concern.

"(The system) receives a large state appropriations grant each year," Davies said. "But I don't know whether there will be budget cuts for the system.

"Our challenge is to make sure the board's concerns are known in the General Assembly."

Beyle added that because of the deficit, UNC-CH will not get money expected during the third and fourth academic terms.

"We will still get the bond money, but the problem lies in trying to figure out what to do around it," he said.

"For example, once you get the building revisions done with the bond money, there is less money to do anything else."

But fiscal problems are not the only issues facing Easley as he takes office.

Beyle said Easley acted in an unusual manner by failing to name a Cabinet prior to his inauguration.

"I certainly think it is a major problem," Beyle said. "I can't recall any governor ever putting themselves in this position."

Beyle also said Easley made the wrong decision by skipping a seminar for new governors held by the National Governor Association.

"Attending the seminar would have helped him," he said. "Right now he has to pull his term together."

But Cari Hepp, communications director for the governor's office, said Easley had specific reasons for not naming his Cabinet. "The governor believes it is important to take the time to find the best people," she said.

Easley appointed his first Cabinet member, Bryan Beatty, chairman of the Department of Crime Control and Public Safety, on Monday.

The State & National Editor can be reached at stntdesk@unc.edu.