02/06/11 — Senators: Cuts won't hinder development

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Senators: Cuts won't hinder development

By Matthew Whittle
Published in News on February 6, 2011 1:50 AM

Both of Wayne County's state senators voted for the measure given initial approval Thursday that would cut approximately $800 million from this and next year's budgets by clawing back monies from such funds as the Golden LEAF Foundation and the governor's One North Carolina Fund and Job Development Investment Grant program, and others.

However, it's those three economic development programs that have most of the opposition upset about what they see as irresponsible cuts by Republicans as the bill passed along a 30 to 18 party line vote.

But, Sen. Louis Pate, R-Wayne, and Sen. David Rouzer, R-Johnston, say they don't expect those cuts to significantly hurt economic development efforts in North Carolina.

"All of the funds mentioned in the bill are unencumbered," Pate said. "That means they're funds that have not been spent in the current fiscal year, and capturing those funds will go a long way toward helping fill the $3.7 billion hole we're in."

He explained that by taking the money out of this year's budget, those funds could then be used to shore up the shortfall in the 2011-12 fiscal year.

"A $2.8 or $3 billion hole is much easier to fill and work through than a $3.8 billion hole," Rouzer said.

He explained that the $800 million figure came from $400 million the bill would authorize Gov. Beverly Perdue to cut -- cuts he said her office is already working on, including some from the University of North Carolina system and other areas she wouldn't normally have direct control over -- and another $400 million outlined in the bill itself.

Of those, about $184 million were outlined specifically, including $3 million from the Job Development Investment Grants, $5.2 million from the One North Carolina Fund, nearly $68 million from the Golden LEAF Fund, as well as money from the Farmland Preservation Trust Fund, the Alcoholic Beverage Control Commission Fund, the Aquariums Special Fund, the Parks and Recreation Trust Fund and more.

"My impression of the understanding is that if she (Gov. Perdue) has a project come up that she absolutely needs that money for, we will give her the money for that project," Pate said. "We obviously don't want to run a business out. If we're in the game of incentives, we've got to play that game."

But, Rouzer said, ultimately these funds only affect economic development "on the margins."

More important, he said, is to improve the structure of the state's business climate through regulatory reform, tax reform and "living within our means, and that's part of what this exercise was about."

Besides, Pate added, the $68 million being taken from Golden LEAF -- the largest single deduction -- is only about 80 percent of the money it will be receiving this year from the tobacco settlement, and only a drop of the $500 million it already has in the bank.

Still, he acknowledged that at first glance, these appear to be deep cuts, but that when they actually took time to look closely at them, they're not as bad as they appear on the surface.

"This probably was not expected," he said. "I don't know that they all had time to really read over it carefully and contemplate it."

But, Rouzer said, it's just one of the many tough decisions the Republicans in the General Assembly will be making in the coming months.

"It was a painful choice. But when you look at the big picture, it is what it is. If these were normal times, I don't think you would have seen this, but we're having to step up to plate and making tough choices," he said.