News-Record.com

Friday's No. 2 editorial.

Back in 2001, incoming Gov. Mike Easley had to confront a crisis not of his own making. Despite a massive and unexpected revenue shortfall, he still was required by the state constitution to balance the budget.

But his decision to intercept millions of dollars earmarked for North Carolina state employee pension funds was the wrong way to accomplish that goal.

A ruling this week by the state Court of Appeals upholds an earlier Superior Court decision against the governor. Yet the battle may not be over. The state can and probably will appeal to the N.C. Supreme Court.

Even so, the appeals court ruling leaves no doubt that Easley acted improperly.
Diverting retirement funds, it concluded, clearly violates a 1950 constitutional amendment that prohibits loaning money from the retirement fund to the state.

“A balanced budget,” the ruling said, “could have been achieved in another way without diverting retirement system funds that have been afforded special constitutional protection.”
In fact, the amount withheld was less than three-tenths of 1 percent of the fund’s then-$43 billion total, and the money was paid back. But raiding retirement funds was widely perceived as violating a sacred trust.

The outcry was loud enough for Treasurer Richard Moore to suggest a constitutional amendment preventing governors from diverting such funds in future budget crises. However, in light of the appeals court ruling, such a move would be unnecessary and redundant.

Granted, Easley and his successors can find themselves between a rock and a hard place. The state constitution mandates a balanced budget, no matter the circumstances, but gives not a clue on how to do it.

But rather than zeroing in on easy targets like cash-cow state employee pension funds, governors should take the court’s advice and “seek a tax increase or cuts in state programs that don’t enjoy constitutional protection.”