Gov. Mike Easley on Tuesday requested that all state agencies come up with three different plans to cut spending as the state braces for the impact of a slowing economy and rising unemployment on its budget for the two years.
The recession and global financial crisis has resulted in a reduction in tax revenue at the state level, leaving North Carolina facing a budget gap in the billions. In a letter to all state department heads and chief fiscal officers, Easley orders the creation of plans that reduce spending by 3 percent, 5 percent and 7 percent.
“The nation lost more than 530,000 jobs in November and that has to mean the unemployment rate in North Carolina will increase significantly,” Easley said in a news release. “We are not immune from the national economy and we have to continue adjusting the budget as we have done since early this summer.”
Easley’s letter calls on department heads and CFOs to find ways to streamline state programs and operations and to cut underperforming or duplicative programs, departments and administrative layers.
The goal is to reduce state spending beyond just the current year, with at least 75 percent of any cuts coming from recurring expenses.
Easley said in his letter that no cuts are to be made to planned capital projects. He also says that any proposals to eliminate programs, offices or sevices should include plans for phasing out jobs.
The plans for cutting spending are due to the Office of State Budget and Management by Jan. 14.
By law, the state must have a balanced budget. The General Assembly next year will be charged with adopting a budget for the two-year period starting July 1, 2009.
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