The Daily Tar Heel

Serving the students and the University community since 1893

Friday March 31st

Easley: Budget Warrants State of Emergency

In the cramped confines of the State Capitol Building, Easley declared a state of emergency and more plans for balancing the budget.

The last time an N.C. governor used emergency powers to deal with a budget crisis was in 1991 when the state faced a budget shortfall of more than a billion dollars.

Most recent estimates indicate that the state's budget deficit will reach between $600 million and $790 million by the end of the fiscal year.

Easley ordered three specific actions -- reviewing budget allocations on a monthly rather than quarterly basis, authorizing himself to take further actions if necessary, and creating an escrow account in the Office of the State Controller into which funds will be collected from several sources and could be used to deal with the budget shortfall.

The funding in the escrow account will come from the suspension of contributions to the state retirement fund, suspension of debt payments to local governments, collecting on money owed by the federal government and pulling funds out of several other accounts.

All told, the additional cuts will bring in $558 million in dealing with the budget deficit.

Easley also mentioned the possibility of pulling $40 million out of funding to the Hurricane Floyd relief effort, though he said such a move would be a last resort.

Easley already has allocated close to $400 million in dealing with the budget deficit -- all of which could bring in enough funding to deal with a budget shortfall of up to $1 billion.

"(These actions) will balance the budget even given the worst-case scenarios," Easley said.

During the announcement Thursday afternoon, Easley demonstrated the outward confidence that he has maintained through the impending crisis.

"I want to make it clear that we have a predictable fund to balance the state budget," he said. "I want North Carolina and the nation to know that."

On Thursday, Easley also announced the creation of a group composed of deputy secretaries in his Cabinet that will examine agency procedures for possible short-term savings.

But Easley wasn't the only one who addressed the budget shortfall, as legislators from both houses of the General Assembly gathered for a budget briefing on Thursday morning.

Senate President Pro Tem Marc Basnight once again urged his colleagues to think out of the box to remedy the shortfall.

"All of you understand our condition -- you see it," Basnight said. "I would encourage all of you to dream a little bit to find solutions to this problem."

Michael McKnight contributed

to this story.

The State & National Editor can be reached at

To get the day's news and headlines in your inbox each morning, sign up for our email newsletters.


The Daily Tar Heel's 2023 Black History Month Edition

Special Print Edition

Games & Horoscopes

Print Edition Games Archive