Bill Would Limit Governor's Power

The bill, approved 73-5, now goes to Gov. Mike Easley for his signature. It is a response to Easley's decision Feb. 5 to withhold $114 million in franchise taxes and $95 million in state reimbursements to address a $1.6 billion revenue shortfall this year.

Three local governments have joined in a lawsuit against the state as a result of the governor's action.

On Aug. 22 commissioners in two N.C. counties voted unanimously Monday to sue the state for local revenues withheld earlier in the year by Easley.

The resolution to file suit originated with Cabarrus County Commissioner Coy Privette. Alamance County also joined the lawsuit.

It will be brought against N.C. Department of Revenue Secretary Norris Tolson and will be filed next week.

The bill defines the taxes as local revenue and not susceptible to being intercepted by the governor. But it then goes on to state that the revenues shall not be withheld unless "the Gov. has exhausted all other sources of revenue."

The House had approved tougher language, but questions remained even in that legislation about whether the governor's powers could be limited. The state constitution requires the governor to take whatever steps are necessary to balance the budget.

Rep. Cary Allred, R-Alamance, said the weaker language in the Senate version made the bill meaningless.

"I think we might as well do nothing as to pass this bill. It is just window dressing," Allred said. "You are giving local governments an opportunity to blame you for raising property taxes, and they have a point."

At a meeting with municipal leaders Feb. 13, Easley said he would return the held funds if and when finances allow.

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.

He said, "We'd rather have (the money) and not need it than need it and not have it," he said.