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The N.C. Court of Appeals ruled Tuesday that then-Gov. Mike Easley acted unconstitutionally in 2002 when he seized $80 million from the Highway Trust Fund to balance the budget.

The court's decision could restrict what steps governors can take during financial crises.

The majority of the three judge panel, Judge Robert N. Hunter Jr. and Judge Barbara Jackson, ruled that the state constitution does not give the governor authority to take money appropriated for one purpose -- road building, in this case -- and use it for another.  

Judge Linda McGee dissented, saying the majority's decision removes the governor's ability to act quickly in a crisis.

UPDATE: Gov. Beverly Perdue plans to appeal the decision to the N.C. Supreme Court, according to spokeswoman Chrissy Pearson.

Senate Minority Leader Phil Berger gave the session low grades.

The Eden Republican said he was still frustrated by the Democratic majority's use of the rules to have its way. His grades:

Legislative Process: D-. Berger said that bills were "pretty much decided" before they reached the Senate floor, and the 2008 budget was "written behind closed doors."

"It's pretty much the same way it's been in other years," he said.

The Budget: D or F-. Berger said the budget did not take into account the troubled economy or financial problems with the State Health Plan. On the other hand, he was happy to see that less money was transferred from the Highway Trust Fund to the general fund.

On the plus side, he praised a pilot project for incentive pay at some school systems as well as the final wording of a bill that would keep guns out of the hands of the mentally ill, which he helped write. 

"I think we ended up with language that respected the Second Amendment and addressed problems evident from the Virginia Tech shootings," he said.  

State Rep. Ty Harrell is focused on roads.

The Raleigh Democrat said he will be focused on finding a way to connect Interstate 540 to Western Wake County, estimated to cost approximately $12 to $18 million.

Harrell said he does not want to see the extension built with a toll road, but he also wants to make sure the highway is extended soon. Under current plans, the completion date for the road is 2032.

"Western Wake County deserves to be able to use 540," he said.

Harrell said he would also work to reduce or end the transfer of money from the state Highway Trust Fund to the general fund, so that more of that money could be spent on roads.

Republicans object to the so-called "sin taxes."

At a press conference this morning, Republican leaders of the state House and Senate said that the state budget should not raise taxes on alcohol and cigarettes.

"In tough economic times, it is not the time to raise taxes, particularly the taxes that hit the poorest people," said Senate Minority Leader Phil Berger.

He called the governor's budget "an attempt at legacy building."

For their budget priorities, Berger and House Minority Leader Paul Stam called for cutting spending, completely ending the annual transfer from the Highway Trust Fund, putting a roads bond before voters in November and not raising any state taxes.

On non-budget items, they called for lifting the cap on charter schools, putting constitutional amendments banning gay marriage and curtailing the use of eminent domain before voters, making the murder of an unborn child a crime and ending the de facto moratorium on the death penalty.

N.C. Go says Gov. Mike Easley's proposed budget is sound.

The coalition of transportation advocates praises proposals to phase out the transfer of money from the Highway Trust Fund, starting with a $25 million reduction the first year.

"In 1989, when the transfer originated it was a sensible proposal, helping to hold harmless funds previously directed to the General Fund," vice chairman Berry Jenkins said in a statement. "Since that time, the General Fund has grown while the Highway Trust Fund – and most other transportation funding – has remained virtually flat."

The group argues that transportation revenue should be spent on transportation projects.

On a separate issue, the coalition says the state should undo the cap on the state gas tax, which Easley has recommended leaving in place.

Legislators and voters might be asked to approve a $2 billion road bond on the November ballot.

Brad Wilson of Raleigh, who heads a statewide transportation study group that will make recommendations in May, said he hopes the fall ballot will include a major referendum.

"To really make an impact on the highway infrastructure, that bond [issue has] got to be of a certain magnitude -- or it's really not worth doing," he said Thursday.

Wilson heads the 24-member 21st Century Transportation Committee, a group of civic, business and political leaders. He also predicted the committee would ask legislators to stop the transfer of $172 millino from the Highway Trust Fund to the general fund. (N&O)

Fred Smith says he's glad Beverly Perdue has a roads plan similar to his.

The Republican gubernatorial candidate has long called for a $4 billion bond to build roads and repair bridges across the state to be paid in part by ending the Highway Trust Fund transfer.

On Thursday, Perdue called for a $1 billion road bond to be paid for in part by ending the transfer.

"I'm glad that she's finally seen what I've been calling for for months," he said.

Smith said he would pay for his more expensive plan by moving the state Highway Patrol and driver's education programs from the trust fund to the general fund. He said those programs could be paid for by cutting "pork-barrel spending" in the budget.

During his motorhome tour of all 100 counties, Smith said he'd seen a lof of the state's most congested roads firsthand, including Interstate 40 near Raleigh, I-77 and I-485 in Charlotte and I-26 from Hendersonville to Asheville.

"If we don't build roads, we're all going to be in a parking lot," he said.

As the chief executive officer of road-paving company C.C. Mangum, Smith also said he would forbid his company from seeking any contracts if he was elected, relying entirely on private work instead.

"It's going to cost me a lot of money, but that's OK," he said.

Correction: An earlier version of this post misstated Smith's position. 

Beverly Perdue unveiled her roads plan in Charlotte Thursday.

The Democratic gubernatorial candidate said she would end the annual transfer of $170 million from the Highway Trust Fund, decentralize the state Department of Transportation, hold contractors accountable and cut construction costs.

"North Carolina's transportation needs threaten our quality of life," she said in a statement. "As Governor, I'll transform the Department of Transportation and hold contractors accountable. North Carolina can become the 'Good Roads State' again."

Perdue had earlier called for ending the transfer, which she said would free up money for a $1 billion roads bond. Democratic rival Richard Moore said that would create a hole in the state budget.

A DOT spokesman told the Associated Press that companies are already penalized for missing deadlines.

State Sen. Fred Smith says as governor, he would support a $4 billion highway bond.

Smith, a Republican running for governor, said his "Good Roads, Safe Bridges" plan would distribute the money across the state's counties on a per capita basis. County leaders would decide how best to use the money, Smith said.

Smith said the state could borrow the money without raising taxes through spending cuts and other measures.

"The issue is not money," Smith said. "The issue is willpower."