Easley Scandal, Budget Woes Top N.C. Story List
By Scott Mooneyham
Capitol Press Association @Drop Cap graf: Two governors - one leaving office, the other beginning - probably couldn't imagine the troubles that they would see as 2009 began.
For the newcomer to the job, Beverly Perdue, the difficulties began as dark clouds over the state's finances.
For the old hand headed out of the Governor's Mansion, Mike Easley, the woes started as questions over his personal finances.
The scandal churning around Easley and the multibillion-dollar financial hole for state government dominated the political news in 2009. The year also saw a legislators vote a historic smoking ban into law and wrestle to ensure the solvency of state-backed insurance programs.
Perdue took office in January, becoming the first woman to hold the post in North Carolina. The celebration was short-lived. The new governor immediately was faced with a budget shortfall that, just halfway into the fiscal year, was expected to exceed $1 billion. Ultimately, the budget hole grew to $3 billion.
In response, Perdue froze most state travel and hiring, ordered agencies to return as much as 7 percent of their budgets, had school systems return a portion of unspent money, and held up some state construction projects. But she also was able to close the budget gap by tapping better than $1 billion in federal stimulus money and more than $500 million in state reserves.
But those steps only saw state government through the final six months of that fiscal year. Perdue and state legislators then had to come up with a budget for a new year, with tax revenues still declining in a faltering economy.
The ultimate answer - in addition to yet more money from the federal American Recovery and Reinvestment Act - was a $1 billion tax hike. The agreement on taxes came only after weeks of negotiations that meant lawmakers didn't have a budget in place until a month into the new fiscal year.
Senate proponents of a complete rewrite of the state code, led by Dan Clodfelter of Charlotte, finally gave in to House colleagues who preferred a more traditional route. The tax package passed included a 1-cent sales tax hike, an income tax surcharge on high-wage earners, and alcohol and cigarette excise tax increases.
Republicans howled that the Democrats who controlled the legislature weren't doing enough curb spending. They voted en masse against the tax hike and state budget plan. They accused Democrats of exaggerating the budget problems.
And they prepared for an election the following year in the hopes that it might change political fortunes and legislative majorities.
Plenty of Scandal
Helping that cause may be a year filled with political scandal.
Mike Easley left office already having squandered the political capital built as an outsider and anti-politician. The image began crumbling when his wife, Mary, landed a $170,000 job at N.C. State University. By spring, published reports about Mike Easley flying around on private jets for free and free cars provided to his wife and son further tarnished his image.
Not long after, federal prosecutors began calling Easley colleagues and state officials before a grand jury. The scandal turned into a nightmare for N.C. State, as allegations of influence-peddling surrounding Mary Easley's job led to the resignation of Chancellor James Oblinger, Provost Larry Neilsen and Board of Trustees chair McQueen Campbell.
Questions continued to arise about the Easleys' purchase of a waterfront lot in Carteret County from developer/political donors Randy and Gary Allen. Campbell had also been involved in the deal. All three men had been appointed to important state boards by Easley.
As the federal investigation continued, the State Board of Elections called on Easley, Campbell and state Democratic Party officials to answer questions surrounding the former governor's campaign finances.
Campbell accused Easley of using campaign money to repair a home. Easley responded, "It never, ever happened." The board ordered Easley's campaign to pay $100,000 and referred the matter to a state prosecutor to consider possible criminal charges.
Testimony during the hearing about large political contributions from donors who sought state environmental permits seemed to spark the interest of federal prosecutors. More than a half-dozen state environmental regulators were called before the federal grand jury as it focused on the connections. One prominent Easley aide, lawyer Ruffin Poole, refused to testify before the state board, citing his rights against self-incrimination.
The scandals didn't end with former governor. In fact, they seemed never-ending.
State Sen. R.C. Soles, one of the longest-serving members of the General Assembly, shot a man outside his home just days after another man had told a Wilmington television that Soles had molested him as a child. The man later recanted the child-molestation allegations.
The State Highway Patrol seemed to be in the news every week, with patrolmen fired or disciplined for having sex on duty or drunken driving. Easley's old security chief, Trooper Alan Melvin, became the subject of an internal investigation involving the possible destruction of the governor's travel records.
Division of Motor Vehicles employees partied on the dime of Verizon Business after the company won a no-bid contract from the state agency. Powerful state Sen. Tony Rand of Fayetteville announced that he was leaving the Senate to head the State Parole Commission, only to be accused of insider trading in a complaint filed by a fired company CEO.
With government sordidness popping out everywhere, Perdue issued executive orders to try to contain the mess. She put government contracts up on the Internet and adopted new e-mail policies, part of what she called an effort to improve government transparency. She expanded ethics requirements to cover more state employees and required more accountability from appointees to state boards and commissions.
It didn't seem to help her approval rating, which polls showed hovering around 30 percent.
The ethics and financial problems didn't prevent the legislature from passing a policy change once unimaginable in a state where tobacco was king. Lawmakers voted to ban smoking in restaurants and bars, a change that will take effect in the new year.
Legislators also came up with fixes to a health insurance plan for state employees and a homeowners insurance plan for coastal property owners. Both fixes angered the insured, leading to higher rates and less coverage. The fix of the State Health Plan kept it solvent; the fix of the Beach Plan prevented insurers from leaving the state and helped keep taxpayers off the hook should a Katrina-like hurricane strike.
Scott Mooneyham writes for Capitol Press Association in Raleigh. Contact him at email@example.com.
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