NC court: State can't use special funds to balance budget

Staff writerOctober 8, 2010 

— Splitting 3-3, the N.C. Supreme Court has let stand a lower court ruling that former Gov. Mike Easley acted improperly in 2002 when he raided the state's Highway Trust Fund to plug a $1 billion budget shortfall.

The highway trust is a special fund established to hold revenue from taxes on gasoline that are supposed to pay for road construction.

The Supreme Court divided evenly on the issue because Justice Patricia Timmons-Goodson recused herself from the case. Timmons-Goodson was an Appeals Court judge when that body decided the issue.

With the Supreme Court split, the Appeals Court ruling baring the fund transfers remains in effect, but will not carry the weight of a precedent from the top court. Therefore, the issue could come up for a decision again through future lawsuits.

A spokesman for Gov. Bev Perdue said Friday she does not feel restricted by the ruling, which applies only to the Easley case. Perdue moved money during the last budget cycle from the Clean Water Trust Fund, the lottery reserve fund and funds for building public schools and buying textbooks.

Perdue is now facing a predicted 2011 revenue shortfall of over $3 billion. Her office said the state's top executive has a constitutional duty to balance the budget during an economic crisis.

"This is not a partisan issue, as demonstrated by the unqualified support from governors Martin, Holshouser and Hunt," said Mark Johnson, a spokesman for Perdue. "The primary commitment to the people of this state is that we have a balanced budget, and the office of the governor needs all of the tools available to make that happen."

michael.biesecker@newsobserver.com or 919-829-4698

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