State Might Face $900 Million Budget Deficit

State budget officer David McCoy met with General Assembly budget writers Wednesday to consider options to blot some of the red ink that has continually marked up this year's state budget.

McCoy said state leaders were aware that the shortfall had the potential to reach the $900 million mark. He added that the figure is in the $400 million to $900 million range budget planners estimated last fall.

But McCoy said the shortfall likely would not stretch past that point. "It's not any worse than what we'd thought it'd be," he said."No economist has suggested it would be beyond the $900 million figure."

McCoy said an exact figure on the shortfall will be available in early February after state economists meet with revenue department officials to determine how much tax revenue the state will collect this year.

He added that additional cuts to government agencies might be necessary to cover the overall lag in revenue that has resulted largely from a decrease in sales tax revenue.

Gov. Mike Easley ordered most state agencies to cut their budgets by 4 percent last October. Easley also ordered a non-recurring 2.7 percent budget reduction for the UNC system. But McCoy added that higher education budgets might not be spared the axe if future cuts in state agencies become necessary.

"At this point, everyone has expressed a willingness to participate, and our discussions would include universities and community colleges," he said.

In addition to cutting spending within government departments, McCoy said officials are considering taking funds from other sources, including the "rainy day" emergency fund and the repair and renovation fund used for the maintenance and repair of state property.

He also said there has been talk of borrowing some of the $300 million that is left in the Hurricane Floyd relief fund this year.

"What we're doing is talking about spending what is necessary to meet the citizens of North Carolina's needs," McCoy said.

Sen. Tony Rand, D-Cumberland, vice chairman of the Senate Appropriations Committee, did not attend Wednesday's meeting but said he hopes additional cuts will not come from higher education. "I think at a time when our state's economy is changing, it is not the time to cut the one thing that has the possibility of pulling us out in these times," he said.

Rand suggested cuts in other areas, such as decreasing the number of state employees. He said legislators could be called back to work before the start of their session in late May, at which point they might discuss the budget crisis.

"If the economy continues to slide, we may well have to go back, but hopefully we will not," he said. "It just depends on the severity of the problem."

The State & National Editor can be reached at stntdesk@unc.edu.