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RALEIGH Gov. Mike Easley quietly ordered state agencies to cut their budgets by 5 percent last month, stockpiling nearly $1 billion in savings to help cover an expected budget gap.
The reductions mean that Gov.-elect Beverly Perdue and the state legislature should be under less pressure to make deep agency cuts after Perdue takes office in January, Easley said Wednesday.
Perdue said she was told of the reductions on Wednesday.
Easley issued a memo calling for a 2 percent cut in September. He ratcheted that up to 3 percent at the beginning of October. Later in the month he received worrisome quarterly sales and income tax figures. Instead of another memo, he and state Budget Director Charlie Perusse called top state officials to push cuts up to 5 percent.
“I said, ‘Let's tell everybody to hold five (percent) until we figure out what's going on,'” Easley said in an interview Wednesday.
Perusse presented the figures to lawmakers at a committee meeting Thursday. Administration officials propose taking $287 million from the state's rainy day fund, giving them a total package of about $1.2 billion. That would provide considerable cushion in dealing with the expected gap between revenue and spending, which some lawmakers say could grow to $2 billion by the end of the fiscal year in June.
The rainy day fund would still have a little more than $500 million.
“Whether it's (the $1.2 billion) needed or not, we won't know until January,” Easley said, “three to five days before we turn the keys over to the Perdue administration.”
