Gov. Mike Easley's top budget officer has told state agency heads to cut their budgets by 2 percent in the current fiscal year in case the economic downturn takes a toll on revenues.
A memo from State Budget Director Charles Perusse to state agency heads last week says that “allotments … will be reduced by two percent of each agency's authorized budget.”
“We are not immune from the nation's economic slowdown and are implementing measures now to give us as much time as possible to manage a revenue shortfall should it arise,” Perusse wrote.
Kennon Briggs, the executive vice president and chief of staff for the N.C. Community College system, said Perusse met with community college officials last week and told them there would be an across-the-board cut of two percent, with the possible exception of public schools.
A two percent cut amounts to roughly $400 million from a $21.4 billion state budget that lawmakers passed in July.
The total will probably be lower because public schools and Medicaid are exempt from the cuts.
The colleges were told in a system memo to comply with the cuts by Oct. 17.
The memo also said that agencies are being asked to hold back an additional one percent of their budgets in case further cuts “are required later this year.”
According to the legislature's fiscal research division, state tax collections are sluggish, but the most unpredictable taxes won't start coming in until the second half of the fiscal year.
Sales and income tax collections were approximately $60 million to $70 million below expectations in July and August, according to a report prepared by Barry Boardman, an economist with the research division.