NC Governor Plugs Budget Shortfall With Pension Dollars

August 10, 2001 ( -Governor Mike Easley of North Carolina is making a habit of funding his state's budget deficit with pension money.

  In the previous fiscal year, the governor had withheld $151 million in pension contributions in an attempt to bring the $820 million budget shortfall back into the black (see Sharing the Pain )

 Now he’s doing it again, the new fiscal year has seen him withholding an estimated $10 million, the first installment of payments in the new fiscal year, due in July, in violation of a budget resolution that lawmakers had passed and he had signed, according to an Associated Press report.

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Representatives of the State Employees Association of North Carolina (SEANC), the employee group that attempted to sue the governor last year, in a case that was thrown out by the judge (see NC State Employee Sue Governor , and Judge Throws out NC State Employees Lawsuit ), condemned his actions and questioned his legal authority.

Crisis Continues

But Easley’s supporters defend the decision by saying that absent an approved final budget plan for the new fiscal year, the financial crisis in state government continues.

Whether Easley will restore the money to the pension funds from the $601 million left remaining at the end of the fiscal year, $426 of which proceeds from the Hurricane Floyd relief effort, or keep it for a rainy day, is undecided.

When he directed the state controller to freeze the July pension payment, Easely ordered that the $601 million go into the state?s suspense reserve, will thwart lawmakers from borrowing the hurricane relief money for the purpose of balancing the budget.

The House budget had called for borrowing $150 million, while the Senate asked for $135 million.

– Camilla Klein                  

MORE on state goverment pension troubles at Illinois Plan Plagued by Bear Market, State History