The Daily Tar Heel

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Monday January 24th

State Officials Say Alternative Funding Program Not Feasible

The coalition proposed a list last week of options including transferring funds from the national tobacco settlement, borrowing money from the remaining Hurricane Floyd relief funds and taking money away from the Highway Trust Fund.

Easley has withheld $209 million from city, town and county governments to deal with a $900 million budget shortfall this year. He also slashed funding to some state agencies, including the UNC system.

Fred Hartman, Easley's press secretary, said many of the alternative plans pushed by the group already have been researched and tried.

"All items proposed are areas the state has already looked at," Hartman said. "We've been dealing with these issues for 15, 16 months now."

He said many of the alternative plans are not feasible because they take needed services away from the people of North Carolina.

"We're not going to take prescription drugs away from seniors, take away hurricane relief funds or stop offering incentives for businesses to come here," Hartman said.

But Durham Mayor William Bell said the proposals would not take away services because the changes would be temporary.

"All of the suggested borrowing is not necessarily permanent borrowing," Bell said.

Bell said he is confident the governor will still consider the proposed alternatives.

Some local officials across the state have discussed suing the state for the withheld funds. Bell said these legal options are still being considered.

"It's an option we hold open but an option we prefer not to pursue," he said.

Bell said the money being withheld came in part from a utility franchise, a tax that originally was administered locally.

He said that the state administers the tax now but that it always has been accepted that the generated funds were local revenue.

Bell said the most difficult aspect of the process has been the abruptness of the governor's decision to withhold the revenue.

"The biggest issue is that it was done without warning," he said. "There was no prior discussion with the governor's office. It sort of came out of the blue."

Bell said the N.C. League of Municipalities is working to guarantee that the funds will go into the hands of localities in the future.

"Legislatively, we'd like to put a fence around those taxes," he said.

But Hartman said the governor's actions are completely legal and constitutional.

"The constitution gives the governor the authority under emergency declaration to do what he deems necessary to balance the budget," he said.

But despite the tension, Hartman said that there is good dialogue and that he is confident the governor and mayors will continue to work together effectively.

Hartman said Easley is committed to finding more savings and giving any leftover funds back to the localities.

"We're looking around every corner, and we'll continue to do so."

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