Easley announced Feb. 5 that he planned to withhold about $200 million from municipal governments to contend with a $900 million state budget shortfall. But the governor said Wednesday that he would return the money if and when finances allow.
But Chapel Hill Mayor Kevin Foy said Easley painted a grim picture Wednesday of the state's economic future. Foy said Easley told municipal leaders that he anticipates the budget deficit for the next fiscal year to be about $1.8 billion. "That's alarming to us," Foy said. "Next year will be a bigger problem."
Foy said it would be difficult to make up for lost funding next year if the town is placed in a similar situation by the state government because the town might have to dip into recurring funds, forcing them to cut services. Much of the money planned to help cover this year's shortfall will come from nonrecurring funds.
Despite the fact that he was unsettled by Easley's economic projections, Foy said the meeting was positive and productive overall.
"I left the meeting with a better sense of how to approach this in a collaborative way," Foy said.
Easley said after the meeting that he was hesitant to withhold municipal reimbursements but that the state simply cannot afford to reimburse municipalities. "We all understand that right now are tough times," he said. "The nation is in a recession, and no state, county or city is exempt from that."
Easley said the state will probably have the money to pay at least a portion of the $200 million in municipal reimbursements but that county and city governments should trim budgets operating under the assumption that they will not receive the money. "We'd rather have (the money) and not need it than need it and not have it," he said.
Easley said time in the meeting was well-spent and lauded the municipal leaders' cooperation.
He stressed that municipal and state leaders are upbeat and view the fiscal situation as a chance for positive growth.
