Legislators Talk Deficit With Town

The meeting focused on Gov. Mike Easley's decision to withhold money from municipalities to help deal with a $900 million state deficit.

The withheld funds will spell a $1.4 million cut for Chapel Hill.

Town Council member Mark Kleinschmidt said it is the responsibility of the legislators to stand up for the town government.

"The legislators should step up, advocate for better decisions, prevent ridiculous tax cuts," Kleinschmidt said. "The money from the tax cuts would more than have paid for (the deficit)."

Mayor Kevin Foy said one of the objectives of the meeting was to plan ways to prevent this situation from recurring.

"We discussed ways we might participate to make sure it doesn't happen again," Foy said.

"We're asking the legislators to guarantee our money won't be used and to give local governments direct authority."

The local legislators responded to the council members' claims that the state, not the municipalities, should be held responsible for the deficit.

Rep. Verla Insko, D-Orange, said Tuesday that town governments should not have to bear the state's load.

"The cities and counties shouldn't subsidize the state," Insko said. "They have their own shortfalls to deal with."

Insko said Easley is aware of the situation but has to balance the budget any way he can.

"He has to take any steps necessary and pull in available sources," Insko said. "He has that authority."

Insko said the best way to provide for local governments is to give them autonomy in determining tax rates, a power Chapel Hill doesn't have. The town needs state approval to raise taxes.

Insko said a real estate tax or an impact fee, a charge that would apply to residential developers, would be the best way to help the town governments.

Kleinschmidt said the problem is that the state is withholding money already budgeted for the fiscal year.

"This isn't about planning for the future," he said. "It's important the state understands what it's done to our situation."

But council member Flicka Bateman said Easley has promised local governments a return in revenue should the state not need the money.

"If things get better, local governments will be the first to get money he releases," Bateman said.

Kleinschmidt said he isn't certain that the funds would be returned to the town.

"(The legislators) seem to think we'll get our money back," Kleinschmidt said. "I'm not sure."

Council member Pat Evans said that although she is not sure of the amount the council will get back, she believes the legislators will try to release as much as they can.

"Will they make every effort to give back the money? Yes," she said.

Bateman said she is not sure the money will be returned.

"I have no idea," she said. "At this point, we have to plan for the worst and hope for the best."

The City Editor can be reached at citydesk@unc.edu.