State Needs To Own Up To Mistakes

Though I doubt those were N.C. Gov. Mike Easley's exact words when he met with a coalition of mayors from across the state last week, the idea remains.

North Carolina is in a fiscal crisis. And if the state government is going to have to suffer, they are going to pass the pain around.

That translated into Gov. Easley's announcement Feb. 5 that the state would withhold payments of more than $200 million to local governments.

Municipalities expected to get those funds and planned their budgets accordingly. Now, they have to scurry back to the drawing board and find ways to make up the loss.

Chapel Hill will have to hack $1.4 million. Carrboro will lose nearly $300,000 and Orange County will lose between $700,000 and $900,000.

That brings us back to the meeting between the governor and a contingent from the N.C. Metropolitan Coalition.

Local leaders from across the state - including Chapel Hill Mayor Kevin Foy and Carrboro Board of Alderman member Alex Zaffron -- lobbied Easley to give them back the withheld funds.

Though both sides came out of the meeting with talk of "good discussions" and "exploring future options," the reality is that the money is not coming to the local governments anytime soon.

It was overly optimistic to think Easley would give in. But as the politicos returned to city halls and town councils, they were forced to start making painful and costly cuts.

To me, it seems as though the state is being a schoolyard bully, taking lunch money away from younger kids.

First off, the money is not the state's. The largest chunk being withheld is $80 million in utility franchise taxes for allowing phone, electric and natural gas companies to run pipes and lines along roads to reach their customers.

The counties used to collect this tax on their own, but it was taken over by the state. The state would only retain 1 percent of the taxes collected as an administrative fee. Basically, the state is a collection agency for municipalities.

So with strong-arming and no warning, the state is in essence "stealing" money that local governments rely on.

Secondly, the state's attitude toward the cities and towns is insulting.

Easley has been diplomatic in his tone during this affair. He is tacitly saying "Grin and bear it" instead of going on record with it.

On the other hand, House Speaker Jim Black, D-Mecklenburg, has been a bit more brazen.

On local officials' complaints, he told The (Raleigh) News and Observer, "I welcome them to the real world. The governor didn't cause this recession. Let's quit blaming things on the governor and the General Assembly. There is certainly some belt tightening that is going to have to occur by local governments."

Hold up.

We shouldn't blame the state government for the state's budget mismanagement? Have three-year-olds been crafting the budget for the past decade?

It seems so. But the crisis was just the flashpoint of years of fiscal mismanagement by Democrats and Republicans.

Yes, Speaker Black, the state government is responsible for this.

Economic times were good, tax cuts were railroaded through and spending was enlarged (especially by former Gov. Jim Hunt's hike in teacher pay).

But you can't keep spending when your cash inflow begins to dribble.

Now everything has hit the fan, and local governments are expected to share the burden resulting from state mistakes and mismanagement.

Easley and Black point out that most of the local governments have cash in reserve that can be tapped into. These funds are meant for natural disasters (not those caused by state politicians), and shouldn't be viewed by the state like a lamb to a wolf.

Local governments have this reserve because they practiced wise fiscal management.

Maybe the governor and Speaker Black can schedule another meeting with the mayors in the near future to learn a few things about budgeting.

Columnist Jonathan Chaney can be reached at jhchaney@email.unc.edu.