GOP Senators Protest Local Fund Cut

The $95 million is money that the state usually uses to compensate the municipalities for the elimination of inventory taxes, which are taxes placed on items stored in warehouses.

Both state and local governments profited from the inventory tax, but the state government decided to repeal it based on the fact that taxation of products is already included in the sales tax.

To make up for the loss local governments suffer, the state chose to pay $95 million to local governments in two yearly payments. Easley froze this reimbursement with his action.

In the letter, the senators said the move unfairly attempts to balance the state's budget on the backs of local governments.

"We feel this proposal breaks faith with our cities and counties," it stated.

But Easley spokesman Fred Hartman said Easley's message by putting the $95 million into an account is that it will be necessary for everyone to pull together to try to close this large deficit.

"(Easley) knows that it's tough on everybody," Hartman said.

Sen. Patrick Ballantine, R-Carteret, said he feels that repealing the $95 million this year is unfair to the local governments.

"It pulls the rug out from under the local governments," he said.

"There is a budget crisis, but we hope to not affect other levels of governments."

Ballantine added that there are alternative ways the state could pay down the budget deficit.

He suggested putting job-training programs into the community college system as well as allowing state employees who are near retirement age to retire early, which would decrease the state's salary expenditures.

Hartman said that while Easley has not yet considered any other alternatives since receiving the letter, the $95 million is put away in an account for now in case it is needed in June when the end of the fiscal year rolls around.

"If there are resources left over, they can be distributed back," he said.

The $95 million is part of $1 billion in spending cuts that Easley has proposed to meet an anticipated budget shortfall that has reached nearly $800 million.

The budget shortfall is a result of the slowing economy affecting the entire nation.

Governors of numerous states have been forced to cut their budgets for the first time in about a decade.

Sen. Jeanne Lucas, D-Durham, said she agrees with Easley that a budget shortfall would affect everyone and so must be shouldered by everyone equally.

"We are all working to have each agency look at their programs to make sure everything is as streamlined as could be," Lucas said. "We are all in this together."

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