Perdue cuts state salaries, warns of $3 billion deficit

RALEIGH (Winston-Salem Journal) - Gov. Beverly Perdue ordered a half a percent pay cut Tuesday for all state employees and teachers and said they would get 10 hours of time off in exchange for the loss in pay.

Perdue also warned that the state's budget shortfall for the current fiscal year may exceed $3 billion.

She said the temporary pay cut will save $65 million, although that's relatively small compared to the shortfall now expected.

Perdue said in a statement she also has identified ways to close the remaining budget gap. She said that will include more special funds, tapping the state's Savings Reserve Account and using federal recovery dollars.

The Democrat said the economic crisis has forced her "to make difficult decisions."

Perdue made the cuts effective through June 30, the end of the fiscal year. Employees will be allowed to take the 10 hours off until the end of the 2009 calendar year.

Before Perdue revealed the larger shortfall projection, state leaders had expected the budget shortfall would be about $2.2 billion this fiscal year.

"North Carolina continues to experience the effects of a national economic crisis, which force me to make difficult decisions in order to maintain a balanced budget through June," Perdue said in a statement.

"I will do what I must in order to ensure that North Carolina can pay our bills and provide the essential services required by our citizens."