At the outset of the state budget crisis, Chancellor John Bardo and Western Carolina University’s Board of Trustees maintained the process of cutting $8.6 million would be transparent.

Faculty and staff, they said, would see their opinions truly matter as the university tries to maintain academic integrity in the face of deep financial cuts.

That promise of organic, grassroots problem solving didn’t hold true when it came to the College of Education and Allied Professions, according to Jacqueline Jacobs. The tenured professor submitted a letter of resignation two weeks ago. She will finish out the academic year.

Jacobs said Dean Perry Schoon, who has been at WCU since 2009, used the crisis as a smokescreen to reorganize the College of Education and Allied Professions as he saw fit, absent meaningful oversight or opinion outside a select few.

“The continued actions by Dr. Schoon, as dean of the college … and the support for him to behave as he has, create such a negative work environment for me and constitute such a total disregard for faculty voice that I find I cannot continue at WCU,” Jacobs wrote in her March 7 resignation letter.

Recommendations by Schoon that certain faculty not be reappointed is being reviewed — at Bardo’s request — by the university’s assistant provost, legal counsel and the chair of WCU’s Faculty Senate. The Faculty Senate serves as faculty’s “voice” for advising the chancellor and provost (second in command behind the chancellor) on the conduct of university affairs.

SEE ALSO: Hunt for new WCU chancellor in the homestretch

For his part, Schoon maintains reorganizing the College of Education and Allied Professions will save $250,000 in administrative and overhead costs, and preserve four faculty positions. Saving money in the tumbledown of a $2.4-billion state shortfall is indeed critical — WCU has eliminated 10 positions university-wide already; up to 15 more will be cut by July.

“During the unpleasant task of identifying spending reductions, we have kept in mind the chancellor’s directive to do all we can to protect the academic core,” Schoon said. “The college’s faculty were involved in this process, and their input has been essential in identifying and recommending programs and resources that are most critical to our core mission.”

That’s only part of the story, and not particularly accurate, according to Jacobs. The nonpublic part, at least until now, is that the reorganization of the College of Education and Allied Professions was forced on faculty and staff, some of whom are afraid to speak out for fear of job repercussions, Jacobs said.

And about that involvement of faculty Schoon refers to?

“It is true that there were faculty involved, but they were appointed by the dean as a task force reporting to him and as the Leadership Council which reports only to him,” Jacobs said. “That is, faculty in these groups were not elected by the faculty to represent them.”

Here’s why this internal debate at WCU should matter to anyone outside academia: The College of Education and Allied Professions is where most of the K-12 teachers, principals and superintendents who serve Western North Carolina receive their training. What happens here, in other words, counts in the region’s classrooms, and will matter to the children in WNC for decades to come. WCU is also the only university in this region that provides a doctoral program for educational leaders.

Reorganizing, or a power play?  

There are three issues: Schoon’s recommendation that three tenure-track professors not be reappointed; the reorganization of the College of Education and Allied Professions, which reduces the number of departmental-level units from five to three; and questions about Schoon’s handling of the doctoral program. About 40 people are seeking that advanced degree.

First, the tenure-track issue. To get tenure, a faculty member must jump through certain hoops at different times for a number of years. Tenure means job protection and ensures the possibility of promotion.

The three faculty members recommended for job elimination by Schoon were in their third- to fifth-year of the tenure track process, meaning they have invested a lot into WCU. And, for its part, the university has invested much in them.

Normally, tenure track professors are invited by mid-February to remain on board with the university for the next year. The controversy erupted after interim Provost Linda Seestedt-Stanford asked the Faculty Senate for an extension to act on tenure track faculty reappointments.

The provost indicated to the Faculty Senate more time was needed in light of the budget situation — it was still not known how much money the university would have to cut — and reorganization efforts then under way.

The Faculty Senate, thinking it was a university-wide request that a multitude of deans had sought, capitulated, albeit reluctantly.

“The Senate voted to support the provost’s request on the grounds that this condition, while upsetting, may be the best chance we have to save as many faculty jobs as possible,” Erin McNelis, chair of the Faculty Senate, wrote in a faculty-wide letter sent Feb. 8.

The problem? This would, the Faculty Senate noted, remove the built-in “system of checks and balances in the collegial review process. However, the case remained that the decisions had been made by the deans, facing a tight timeline and with the best knowledge of the budget situation they possessed.”

Additionally, these were real people whose jobs and lives were on the line, and who would be placed, the Faculty Senate letter stated, “in limbo” by the acquiescence of the very group ostensibly serving as their voice.

“I was gravely disappointed that the faculty (senate) would capitulate to bad management on the part of the deans, but understood that they felt they were protecting faculty jobs,” Jacobs wrote. “When it turned out to be only three, third- to fifth-year faculty … in one department (ours), I was appalled.”

So was the Faculty Senate, which rushed to send a second letter in an attempt to clarify members’ position.

“Your Faculty Senate leadership has recently become aware that there is a great deal of angst among some faculty regarding the recent 3rd – 5th year non-reappointment recommendations for reasons of institutional needs and resources.  … the senate planning team determined that they did not have adequate knowledge of the processes or procedures surrounding these decisions and determined that a more thorough investigation is in order before further response.”

As it turned out, the provost disregarded at least part of Schoon’s recommendation, opting to reappoint two of the three faculty members in danger of losing their jobs.

That third faculty member is still waiting to hear whether she has employment. Since this person, Jacobs wrote, is the only faculty member in the College of Education and Allied Professions’ doctoral program with doctoral-level training in higher education administration, “‘institutional need’ is clearly not a consideration.”

Why the emphasis on institutional need and resources? Because that’s a specified reason, as laid out in WCU’s faculty handbook, allowing the university not to reappoint faculty members — that is, if they don’t fill said institutional need or resource.

Jacobs characterized the still possible non-reappointment of this third faculty member in the College of Education as “beyond belief.” She added in her letter, the “return of my salary, through my retirement, eliminates any effort to claim ‘budget’ as the reason for non-reappointment … based on ‘institutional needs and resources.’”

McNelis told The Smoky Mountain News this week that Bardo asked that the “processes tied to those reappointment decisions” be looked into.

“In doing so, we’ve looked into the college’s program prioritization, program review, budget and potential restructuring, as they relate to recommendations for reappointment,” the chair of the Faculty Senate said.

McNelis did not say when the results of that review would be made public.

‘Failure of leadership’

Secondly, the issue of reorganization.

Schoon said he took no joy in having to make these tough choices.

“Both the need to reduce the budget and to make organizational changes to achieve greater efficiency led to very difficult decisions, some of which we know regrettably affect people’s lives and families,” Schoon told The Smoky Mountain News.

Jacobs, at least, isn’t buying it.

“I want the record to show that my decision is predicated on what I believe to be the failure of leadership in this college and university as evidenced by how our college has been informed of Dr. Schoon’s reorganization plan, as opposed to being integral in the discussion of reorganizing it,” she wrote.

Schoon disputes the allegation that faculty members were excluded. In fact, he said faculty members were given “extensive input” into reorganization and prioritizing programs. A faculty task force was specifically created to guide the process, and input was sought from a leadership council that included the department heads of each of the five departments in the college.

Schoon said a proposal for reorganization was provided to the college in early February. “The college faculty then had the opportunity to provide input to their department heads, who discussed the aggregated information and provided it to the dean. In addition, several programs requested direct meetings with the dean and subsequent discussions were held,” Schoon said.

And lastly, the issue of the College of Education and Allied Professions’ doctoral program, which critics say is now bereft of faculty oversight. This, if true, leaves the university’s flagship doctoral program adrift.

“Doctoral students are overseen by the director of the doctoral program,” Schoon said in response. “The assignment of that directorship may change in the reorganization but it will remain with a faculty member.”

Jacobs, however, said the professors for graduate students have been split across three departments. She maintains the program’s faculty should be kept together in the same unit to ensure quality programming for students.

The Players

• Interim Provost Linda Seestedt-Stanford, who came to WCU in July 2007 and is founding dean of WCU’s College of Health and Human Sciences. She is serving as interim provost and senior vice chancellor. Filling that position permanently has been postponed until a new chancellor is hired. She asked for more time from the Faculty Senate to delay making a decision on faculty reappointments, triggering the ensuing controversy.

• Dean Perry Schoon of the College of Education and Allied Professions, who became the dean in June 2009. Critics say Schoon used a power vacuum at the university — a retiring chancellor, interim provost and $8.6 million in budget cuts — to reorganize the college he oversees to suit himself, not the needs of WCU and the students.

• Erin McNelis, the current chair of the WCU Faculty Senate. McNelis, associate professor of mathematics and computer science, has been on the WCU faculty since 2002. She’s charged with helping to sort out whether Schoon’s actions on certain faculty reappointments were within university guidelines.

• Jacqueline Jacobs, a respected tenured professor in WCU’s Department of Educational Leadership and Foundations who quit in protest this month over a re-organization and attempted non-reappointment of three other faculty members in the College of Education and Allied Professions.

• Chancellor John Bardo, who after 15 years in the top slot at WCU steps down July 1. Has his pending retirement created a leadership void at a university struggling to deal with $8.6 million in budget cuts? Bardo says no — he described himself recently in a board of trustees’ meeting as a lame duck, but asserted, “this duck still has legs.”

Mountain Projects might take control of the REACH village in Sylva, ensuring the low-income housing would remain available to area residents in need, especially victims of domestic violence.

This does not mean, however, that REACH of Jackson County, an anti-domestic violence agency, will have shed its well-publicized financial woes. The nine-unit village, built in 2001 for $1.1 million through federal and state loans, precipitated a money crisis for REACH because the nonprofit couldn’t meet loan payments.

Even if Mountain Projects saves the village from foreclosure, REACH must come up with between $100,000 and $150,000 to keep operating for several more months until state grants come through (the financial heartbeat of many do-good agencies such as REACH).

North Carolina has taken to doling out grants about four months into each fiscal year, and as a result, agencies that desire solvency have learned to sock-away money. REACH has none in the piggybank. The agency has missed payroll a couple times, and had the water cut off to the village for nonpayment of bills, among other problems.

The Jackson County Board of Commissioners this week agreed to send a letter on Mountain Project’s behalf asking for a community service block grant for $600,000.

Mountain Projects is a nonprofit that administers programs to benefit the needy and elderly in Haywood and Jackson counties. Patsy Dowling, executive director, said the federal loan agency and REACH asked Mountain Projects to take over the village. Initially, Mountain Projects balked at assuming a loan of $840,074, but with a plan in the works to seek grant money, the agency said OK. The remaining balance of the loan will be paid by the N.C. Housing Finance Agency.

“We are very happy that the county commissioners agreed to partner with Mountain Projects to apply for funds to allow Mountain Projects to take over the village,” said Kim Roberts-Fer, executive director of REACH. “Our financial situation does not allow us to continue to maintain the village for the several months it will take for this process to be completed. We will be contacting (the note holders) to discuss possible ways to allow Mountain Projects to take over the project sooner. If no options are available within a few months, REACH will be unable to continue paying to maintain the property.”

Politics and state budgets aren’t usually that interesting, but this year that’s not the case. Ideologies are clashing as lawmakers struggle to find a way through this recession, and we will all be affected by the outcome.

North Carolina and Wisconsin are very different states but share a similar problem — a budget crisis like that facing states across the country as stimulus funding dries up and tax revenues are still down. Fortunately for us who live in the Tar Heel state, our leaders are dealing with their problems in a very different fashion.

In last week’s edition, we published a cover story examining how the state was looking at this year’s Golden LEAF allocation as one extra pot of money from which to stem an expected $2.4 billion budget shortfall. The money is a continuing payment from the massive lawsuit brought against tobacco companies by 45 states.

Gov. Beverly Perdue does not support raiding the Golden LEAF money. She has sent a budget to lawmakers that will lead to a raft of cuts, including cutting thousands of state jobs, but she says she won’t reduce teaching positions. A story in The Mountaineer newspaper this week had local lawmakers predicting the possible closure of the prison in Hazelwood and significant cuts to community colleges and a cost shifting that will force public schools to come up with money for transportation and text books (meaning teachers could be cut despite Perdue’s promises).

Amid this climate, what is the state to do? Even the Democratic governor’s budget will hurt local communities while keeping alive a sales tax that was due to expire. Almost every GOP lawmaker in the General Assembly ran on the promise to sunset that tax, so the Republicans — who control both chambers of the state legislature — have to either make deeper cuts or find new money. And that is what led to the proposal that money from funds like the Golden LEAF may be diverted for at least a year.

After our story ran last week, newly elected Sen. Jim Davis, R-Franklin, called to say our story was good in pointing out the budget position the state finds itself in. Now, however, everyone has to look for creative ways to find a fix.

“What if the Golden LEAF money were re-distributed to, say, the Rural Center,” suggested Davis, saying this was just an example of the kind of thinking that needs to happen in the General Assembly. His point was the money would still come back to the rural communities who need it, but that the $1.6 million in administrative costs could be saved.

So what’s going to happen in Raleigh come June when the rubber hits the road? Unfortunately, I believe some sacred cows will be gored in the name of fiscal responsibility. Personally, I think a one-year diversion of funds going to some granting agencies is not a bad idea. I also think pay cuts for higher-paid state employees is not out of the question.

I would rather look at those options rather than cutting classroom teachers, raising tuition, and hamstringing the community colleges. We can only hope that with compromises a fair spending plan can be developed.

•••

In Wisconsin, the plan to take away the bargaining rights of unions is just shortsighted, an idea that will do much more harm than good.

For those following the situation up there, the GOP governor wants public sector employees to begin paying some of their own money into their retirement and health insurance plans. In a state where the average teacher salary is about $75,000 per year, this seems a reasonable proposition.

On the other hand, he also wants to take away the collective bargaining rights of the union. The employees have agreed to the pay concessions, but they are protesting in the streets to protect their bargaining rights for the future.

As the economy has soured and we’ve lost manufacturing jobs in this country, unions have been painted as a big evil. The union groups that once were credited with standing up for the little guys and winning concessions from factory owners are now painted as the cause for the flight of manufacturing to the Third World.

Despite sometimes unsavory actions by union leaders and despite sometimes unreasonable demands for workers who make more than most working-class folks, I still believe strongly that unions play an important role in the American workplace.

As income disparity widens, unions remain a voice for the working class. As the workplace changes, unions continue fighting for benefits and fairness. Taking away their voice is just wrong, and that’s exactly what the Wisconsin governor wants to do.

(Scott McLeod can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..)

Jackson County commissioners are faced with a dilemma over the new Sylva library slated to open in May: either pony up more money for staff or the library will be forced to cut hours.

The new library is four times bigger than the current one, and as a result needs more staff. It needs another $170,000 to remain open the same 45 hours that it is now. That’s a 35 percent increase over the county’s current funding for the Sylva library of $500,000.

But Jackson County is facing budget shortfalls, not surpluses.

“We’ve been hit pretty hard,” Commissioner Doug Cody said. “We are taking the punches really well so far. We are trying to be creative.”

The new library will have three desks — a main check-out counter, a children’s desk and a reference desk — compared to just one at the current library. The new library also has a large computer lab.

The current Sylva library is so tiny that any of the workers behind the circulation desk can easily pop over to the computer area or the children’s section. They can be reshelving books one minute and fill in behind the counter the next.

But the new library is far more spread out. The computer lab has its own room for example. And the main adult book stacks are on a separate floor from the circulation desk.

As a result, the new library needs twice the staff: the equivalent of 15 positions compared to just seven now.

“If the funding is not increased the hours of operation will have to go down,” said Chuck Wooten, interim Jackson County manager. “I can imagine there would be a lot of pushback from the public to do that.”

More than half of county residents have library cards. The public anted up generously for the new library, a sign of its popular support, Wooten said. Friends of the Library raised $1.8 million in grants and local contributions to furnish the library.

The Smoky Mountain Brass Quintet even commissioned a fanfare to honor the library, specially written by a composer to be performed at the grand opening in June.

“I think it would be very disappointing to the people in this community to not have convenient access to their wonderful new library,” said Karen Wallace, the head of the Fontana Regional Library system. “If we don’t get an operating budget increase, they won’t have the access that the facility warrants.”

Wallace pointed to the $8 million price tag for the new library and restoration of the adjacent historic courthouse.

“It is a big investment to build that facility. To not to be able to use it to its potential would be really disappointing to people,” Wallace said.

Cody and Wooten met with Jackson librarians last week to go over the figures. Cody said commissioners will likely hold a work session on the issue to figure out what to do — one of many hard decisions as part of developing a budget for the coming fiscal year.

“I’m sure there will be some nervousness over the situation, but we just have to drop back and punt and see where we stand on this,” Cody said.

Ideally, the county could increase library hours from 45 a week to 60 a week, Wallace said. The North Carolina Public Library Director’s Association recommends that the main library in a county should be open a minimum of 60 hours.

But doing so would take another $125,000.

Wooten agrees that would be wonderful, but whether it is doable is another story.

“We are really opening our library at the worst possible time,” Wooten said.

Cody said he would like to see library hours increased as well, but probably not until the economy improves.

“I don’t see us initially getting to 60 hours. And conversely I don’t want to see them be open any less either,” Cody said. “If you only operate 30 hours, that is not giving people much opportunity to use the facility.”

Commissioner Mark Jones said the county will obviously have to give the library more money, but isn’t sure whether it will be the full $170,000. Jones wonders if there is any middle ground.

“Can we shave off a little time here and a little time there?” Jones asked. “These are tough times and we have to make tough choices.”

But Mary Otto Selzer, a volunteer with Friends of the Library, said the public wants longer hours, not shorter ones, pointing to the input gathered during focus groups held in conjunction with planning for the new library.

“One of the things we heard loud and clear from people was they would like to see the library expand its hours,” Selzer said. “We need to listen very carefully to our community to address the community’s needs. We hope the commissioners will find a way to at least maintain the 45 hours a week we are currently open.”

Selzer pointed to the current lack of evening hours. The library is never open past 6 p.m. It is only open six hours on Saturday and not at all on Sunday.

“For folks who work and working parents there is not a lot of opportunities to use the library,” Selzer said.

Library use across the country has increased during the recession. Those forced to cancel Internet service at home have turned to public computers at the library. More people are checking out movies instead of going to the video store, reading newspapers and magazines at the library instead of home subscriptions and borrowing books instead of buying them.

The library is also a place used by job seekers and those going back to school, he said.

Indeed, Wallace said the computer terminals are popular with those looking for work, since many jobs require people to fill out online applications. Wallace also said they’ve seen an increase in people who have turned to distance learning for new degrees, which require online exams.

Jones suggested enlisting volunteers. That plan has shown promise for the Green Energy Park, which attracted 45 prospective volunteers to an organizing meeting last week following news that the county would cut its funding. The Green Energy Park houses a collection of artist studios fueled by methane seeping out of decomposing trash at the old county landfill.

“Ask not what your county can do for you, but what you can do for your county,” Jones said.

Coming from behind

While another $170,000 annually is a substantial increase, Jackson librarians point out that the library is severely underfunded today. Part of the increase is merely catching up to where they should be already, according to Wallace.

When compared to surrounding counties, Jackson County libraries are indeed underfunded. Library funding amounts to $15 for each county resident. Per capita, that’s 36 percent below Haywood County and almost 50 percent below Macon County. Jackson’s library funding is 25 percent below the state average for all 100 counties.

Since the Sylva library is so small and antiquated, however, it isn’t used as much as libraries in other communities. Macon County sees nearly twice the library use of Jackson, for example.

Until now, that’s allowed the Sylva library to get by on fewer dollars.

Dottie Brunette, the head librarian in Jackson County, said she would have been hard-pressed to squeeze more staff into the existing library. There simply wasn’t enough elbow room for more people behind the small desk.

Jackson’s librarians are bracing for an explosion in library use when the new one opens, however.

Since a new library opened in Franklin in 2007, library use has shot up 50 percent. When Transylvania and Polk counties opened new libraries recently, they saw even bigger increases. The upsurge wasn’t a mere blip following the opening of a new library, but went up and stayed up permanently.

The stage is set in Sylva for an even more dramatic increase in library use than what was seen in other communities where new libraries opened. The current library is so bad, a smaller segment of the public uses it.

“The library has not been able to meet their needs. If you come to the library and can’t get what you need, after a while you just stop trying,” Wallace said.

Only 50 percent of Jackson residents hold library cards. In Macon County, that number was already 75 percent prior to the new library opening. Additional library use could only climb so high, and indeed most of the increased use in Macon came from existing cardholders simply visiting more often. But in Jackson County, the increase will not only come from more trips among existing users but from brand new users.

Wallace also pointed out that new library construction has been prominent in the public eye.

“I anticipate the numbers may be even higher in Jackson,” Wallace said. “I say that because the building of this library has had a very successful marketing campaign. And this library has been a long time coming.”

Jackson’s libraries are at the bottom of the barrel in yet another category. The volume of books and materials per capita are less than in Haywood, Macon or Swain. Again, there simply wasn’t room for stuff.

“There’s books lying across the tops of shelves because we have no room,” said Brunette.

Out of the blue?

In addition to the extra staffing, the county is on the hook for bigger heating and cooling bills, higher liability insurance and more janitors. County Manager Chuck Wooten estimates the cost of running the building will go up by $70,000 to $90,000, from $50,000 now.

Wooten, who came on board as interim county manager at the same time the new commissioners took office, said he does not know if these calculations were done previously.

“I could not find where there was an estimate of what it would be with the new building,” Wooten said.

An increase in library funding has blindsided three newly elected commissioners as they grapple with how to cut the county’s budget.

“Doesn’t seem amazing to you that this just came up? Why couldn’t this have been figured out when we thought about building the building?” asked Commission Chairman Jack Debnam. “If I got ready to build a building, I believe I would look at how much more it would take to staff and maintain it.”

Three conservative newcomers to the county board ousted their more liberal opponents in the November election, partly on the resounding Republican platform of reducing government spending.

But now this has landed in their laps, they said.

“This should have been anticipated two or three years ago when they started this project,” Cody said. “I am not trying to throw blame on anyone, but when you have a two-story building you effectively have to double your staff to keep people from carrying the place away.”

According to Tom Massie, a former commissioner who lost re-election last fall, the old board was well aware of costs the new library would require.

“We’re not stupid,” Massie said. “We knew it would cost more and we would have to rearrange funds. You do that in every budget year.”

Massie said deciding how to spend limited county money goes with the territory.

“We had our priorities and they have their priorities, and those are the tough decisions they will have to make,” Massie said.

Massie said the new board is learning that the job isn’t as easy as it looks.

“They had all the answers in the campaign,” Massie said.

Massie said the rubber will meet the road over the next few months as the new board develops a budget for the coming fiscal year.

“Come July 1, they are going to own the new budget,” Massie said.

Commissioner Mark Jones, who served on the old board with Massie and is still on there now, also said the increased costs aren’t exactly a surprise.

“We were aware that the new facility, with the size and the fact that it has multiple levels, would take additional staff,” Jones said.

Jones said when the last board embarked on the new library in 2007, they didn’t realize how much the recession would hurt county coffers.

When asked if the new library was a bad idea, neither Debnam nor Cody would go that far.

“I’m not going to go there,” Debnam said, when asked if the library shouldn’t have been built. But said “they should have considered it.”

“Regardless of how anyone feels about it, the library is there,” Cody said. “I have been through it and it is a beautiful facility. I am not going to tell you or anyone else I would have done anything any different. It is great.”

It’s no secret that the state budget is in a tight spot. In the few weeks the General Assembly has been in session, a raft of new laws already have hit the legislative floor, most proposing cuts in varying degrees of severity.

But perhaps the most debated has been Senate Bill 13, a Republican-penned proposal called the Balanced Budget Act of 2011. The bill calls for several money-moving measures that would dip into special pots of money in an effort to relieve the deficit — the most controversial being a proposal to raid the coffers of the Golden LEAF.

Golden LEAF has handed out hundreds of millions in grants during the past 12 years. Its purpose: use proceeds from the lawsuit against tobacco companies to help tobacco-dependent communities transition away from the ever-diminishing returns of the once-bumper crop and into other economic markets.

As the crown jewel of King Tobacco’s reign, few areas have benefited from the funds as much as the western counties. Haywood County alone has received more than $2.7 million in grants from Golden LEAF to fund projects such as the new Regional Livestock Market, a covered arena at the fairgrounds, a sewer line upgrade along Champion Drive in Canton and the Buy Haywood program, which helps local growers market and sell their products.

Jackson County has gotten more than $3.5 million to fund projects, though a good share of that was for regional efforts such as WNC EdNET, a program to bring broadband technology into public schools in six western counties.

Over the years, Golden LEAF has taken in $867 million and doled out just more than half of that as grants and scholarships, keeping the rest invested. Every year, the pot gets another influx of funds from the structured tobacco settlement, and that money is invested for future use.

For WNC, said L.T. Ward, that money has been invaluable, and losing it would be a hefty blow. Ward is the vice president of WNC Communities, the group that, among other things, is the driving force behind the Regional Livestock Market that’s scheduled to open next month in Canton.

The market will offer a place for local cattlemen to sell their livestock, something that’s currently missing from the regional landscape. Such a market is vital for the many former tobacco farmers who have now turned to cattle to replace their lost or dwindling profits.

That particular project got $600,000 from Golden LEAF, and more than that from the Tobacco Trust Fund, whose yearly allocation is also on the chopping block in SB13.

“If the Golden LEAF was not there, the numerous innovative ideas that are continuing to come forward would not because of lack of funding or encouragement,” Ward said. “We obviously would’ve been short of budget considerably.”

But lawmakers in favor of the bill — Republicans all, the vote was split directly down party lines — are quick to point out that no one is proposing a permanent shutdown of Golden LEAF. It’s more, they say, like a one-time emergency payment.

“We’re just taking this year’s allocation for the Golden LEAF,” said Rep. Jim Davis, R-Franklin. “The Golden LEAF still has $560 million. Their principal is still there.”

And while Davis stopped short of praising the fund outright, which many Republicans, particularly those outside rural areas, are wont to refer to as pork spending and corporate welfare, he was adamant about the proposal’s status as a temporary budget measure to cover this year’s shortfall.

But for those closest to Golden LEAF and its benefits, they’re afraid that the one-time measure will be a gateway to endless diversions of the foundation’s money away from the economically depressed communities it was created to help.

And it’s important to note that the money would be diverted for this year’s budget, which is already balanced. Next year, a $2.4 billion deficit, according to the most recent estimates, still lies in wait.

Robbing Peter

If you’re looking for a more vehement opponent of SB13 than Dan Gerlach, it would likely be a futile search. As president of Golden LEAF, he’s understandably worked up about the idea of swiping the foundation’s annual paycheck, and he’s worried that it won’t stop there.

He’s sympathetic, he said, to the legislature’s plight. There’s a pretty big gap between what they’ve got and what they need, and the cash to fill it has to come from somewhere. But he’s concerned that funneling it away from long-term economic drivers such as  Golden LEAF will only lead to more fiscal heartache in the future.

“The thing we’re defending against is the precedent that it would set,” said Gerlach. “Once you start diverting funds from their original purpose into the state’s general fund, it’s easier for this to happen again and again and again. We’ve been good stewards of this money, we should be allowed to continue to do so.”

That is precisely the argument that Democratic lawmakers are making, that while once in an emergency might be appropriate, it opens the floodgates to a slippery slope of fund rediversion that will eventually bleed the original funds dry.

“The first dip into that money is the hardest,” said Rep. Ray Rapp, D-Mars Hill. After that, he said, a dip back into the well becomes easier every time.

Unintended consequences

For Rapp, however, opposition isn’t just about the slippery slope argument, but about the unintended consequences that he sees this bill fostering.

“The funds just are not going to make that significant a difference in the overall savings, but it sends that chilling effect. We’re losing funding from a key economic development source, so it’s especially hurtful for us,” Rapp said.

That chilling effect he’s talking about is one Mark Clasby knows well. Clasby is the economic development director in Haywood County, so he spends a lot of his time courting businesses from around the region and around the nation to set up shop in Haywood County. And diversions like this that take money away from funds that could — and do — entice businesses into the region create a sense of uncertainty that could frighten away potential industry.

“Golden LEAF has been instrumental in recruiting businesses,” said Clasby.

“If you don’t have that kind of funding, then you have almost stagnation. You don’t have the opportunity to have development so you can create new jobs so you can make life better for individuals.”

Not everyone agrees, of course. Brian Balfour, an analyst at conservative thinktank Civitas, has long followed — and opposed — Golden LEAF precisely because it does offer government incentives to businesses.

“I would argue that the use of these incentives causes more uncertainty,” said Balfour, because it creates an economic picture that’s at the mercy of politicians, rather than the market. “It creates an uneven playing field. What that does is it politicizes more of the entrepreneurial decisions and the way the economy grows.”

Instead of incentives, said Balfour, what the state’s economy really needs is deregulation.

Proponents of funds such as Golden LEAF, however, would counter that, after tobacco’s quick exit, WNC in particular desperately needed some help to fill the massive economic gap the departing crop left in its wake.

To hear George Ivey tell it, Golden LEAF, along with the Tobacco Trust Fund and the NC Agriculture Development and Farmland Preservation Trust Fund, have been invaluable in helping revitalize rural areas left destitute by tobacco.

Ivey is a grant writer, consultant and project manager in Haywood County who has been closely involved with many of the area’s Golden LEAF recipients, including the Regional Livestock Market.

“Those three funds are really the primary funders of a lot of projects throughout the state and throughout this region,” said Ivey. “Without them, I honestly don’t know where you turn, because they both have the money and understand the role that farming plays, not only for farmers but in the larger community.

“Those three funds understand that tobacco is gone but agriculture is still the No. 1 driver of the North Carolina economy.”

And that’s pretty much the argument made by the foundation itself: we’re helping to revitalize the rural economy at no cost to the taxpayer; let us keep doing it. Indeed, it is the ready defense Dan Gerlach has for his foundation’s mission and existence.

“Our investment earnings have been over $214 million on the investments that we make,” said Gerlach. “We have paid for grants that didn’t have to come from any taxpayers pocket.”

The subtext there is clear: isn’t a 12 percent return that’s being put back into economic development better than just dumping cash into the general fund?

And that’s a hard argument for Republican lawmakers to counter. In fact, few are trying to do so. But many are pointing at the $2.4 billion hole that’s looming on the horizon in next year’s budget, making the strong point that it has to be filled somehow, and it’s easy to see why Golden LEAF is an enticing cash cow indeed. Compare that to cutting teachers, for example, or community college budgets.

“We have to get our fiscal house in order,” said Davis. “It’s going to be painful, and our job and our mission is to spread the pain.”

What is the Golden LEAF fund?

A quick look at the history of Western North Carolina will show that there is no crop more important than tobacco. The plant has left an indelible mark on the mountain landscape, first with the streams of money it brought, and then the economic hole it has left.

Today, though tobacco itself no longer occupies a place of prominence, its economic effects are still rippling through the mountains, mostly in the form of grant money from Golden LEAF.

For the last 12 years, the region’s tobacco-dependent communities have been reaping the spoils of a massive lawsuit brought by 45 states against major tobacco companies over healthcare costs caused by tobacco use.

In North Carolina, that’s totaled nearly $1.7 billion so far, with 50 percent going straight to the Golden LEAF. The foundation — officially dubbed the Long-Term Economic Advancement Foundation — was set up to funnel that money back into the state’s tobacco-dependent communities.

While other states dropped their settlement cash straight into the general fund from the outset, North Carolina shied away from that approach, setting up Golden LEAF and other stewards — notably the Tobacco Trust Fund — to look after and dole out the settlement cash to tobacco-dependent areas in an effort to foster economic growth.

Local spending

Haywood County Agriculture and Activities Center Association, Inc.: $275,000

Construction and upgrades at the multi-purpose arena at the Haywood County Fairgrounds.

Haywood Community College: $1,573,109

Establishment of the Western Regional Advanced Machining Center at the Regional High Technology Center (RHTC).

Haywood County: $60,000

Created the Buy Haywood Market Development Project to develop a comprehensive plan to brand Haywood County tomatoes and peppers.

Haywood County Schools Foundation: $250,000

Expanded the machinist training program at Pisgah High School to meet the demand for highly skilled machinists.

Haywood County Economic Development Commission: $85,000

Funded the Buy Haywood Market Development Project which helps develop markets for Haywood County farmers.

Haywood Vocational Opportunities, Inc.: $300,000

Helped Haywood Vocational Opportunities, Inc. (HVO) expand its operations and secure additional contracts for production of medical supplies.

Haywood County Economic Development Commission: $15,000

Funded statewide feasibility study to identify demand for a poultry and rabbit processing facility in WNC.

Haywood County Schools Foundation: $50,182

Purchased an office mill and lathe for Pisgah High School metals program.

Town of Canton: $100,000

Expand and upgrade the Canton’s wastewater infrastructure in the I-40 Corridor at Exit 31.

Southwestern Community College: $75,000

E-commerce marketing plans and strategies for a three-county area.

North Carolina Center for the Advancement of Teaching: $930,186

Funding for the North Carolina Center for the Advancement of Teaching’s continuing effort to increase the number of National Board Certified Teachers.

Jackson County: $135,000

Funding for the Jackson County Green Energy Park.

Western Carolina University: $200,000

Western Carolina University’s innovative product development plan for the health care industry.

Western Carolina University: $37,000

Support for the Kimmel School Construction Training Program at Western Carolina University.

Southwestern N.C. Planning & Economic Development Commission: $2,205,539

Funded high-speed broadband connections to schools and counties in a six-county area.

Total: $6,291,016

The financial situation facing REACH of Jackson County is so bleak the nonprofit is facing the possibility of shutting down, leaving women and children who live in abusive relationships nowhere locally to turn for help.

The nation’s economic downturn, coupled with what seems to have been terrible business decisions by the agency itself, have threatened to end the 32-year history of REACH.

The nonprofit in November 2001 opened a $1.1-million transitional-housing complex for victims trying to escape abuse. The “village,” as it’s dubbed, is now in foreclosure. Associated costs continue to bleed dollars although REACH is no longer making loan payments.

A couple of caveats: First, the current executive director of REACH, and the board members who oversee the agency, were not the ones making the decisions that helped land this anti-domestic abuse group in such dire straits.

Secondly, who can in good conscience flatly assert the prior board’s desire to build the village was a bad one? The federal government and state government approved the concept, local leaders joined in the general celebration when ribbon-cutting time came, newspapers across the region published articles and editorials that were supportive and full of acclaim; not one reporter, including this one, ever attempted to crunch the numbers themselves.

And, indeed, maybe the blame lies with nobody, but instead is the inevitable result of an impersonal crashing economy. Hard times certainly brought down bigger prey than this one small nonprofit group: whole housing developments went under. Banks went under. During the last election, Democratic control of the state and nation went under. Now, REACH, too, might go under.

The facts are these: If the people of Jackson County want the anti-domestic violence agency to continue operations, three things must happen. Wallets must open, volunteers must step forward, and the agency must successfully and completely reinvent itself.

Hunkering down

There is a certain bunker-mentality feel when you visit the administrative offices of REACH of Jackson County these days. Executive Director Kim Roberts-Fer and the agency’s finance director, Janice Mason, are consumed with counting pennies. The two women’s workdays, and even some of their off-work hours, are spent discussing and mulling over how to best spend what they do have.

No money hasn’t meant no need: During fiscal year 2009-10, REACH of Jackson County received more than 400 crisis-line calls, provided emergency shelter for 37 women and 48 children, and was involved in 269 counseling sessions.

No matter what happens to the nonprofit agency, Jackson County won’t be getting out of the domestic violence caretaking business, said Bob Cochran, director of the county’s Department of Social Services.

“If REACH weren’t there,” he said, “we would have to look at other ways to provide these services as a county and as a community.”

There are a few counties in North Carolina where local government does directly provide such services. Cochran really hopes it doesn’t come to that, however. He wants REACH to survive. Cochran said he intends to provide the agency’s workers with whatever support he can, including speaking on the nonprofit’s behalf to county leaders.

“REACH is just critical,” he said.

‘The numbers didn’t work … from Day One’

Shortly after she and her husband left Maine two years ago and Roberts-Fer started her new job in Jackson County, she had a terrible realization, one of those ‘Oh my God, what have I gotten myself into’ moments.

“The agency was in financial trouble the day I came in,” Roberts-Fer said.  

REACH didn’t have enough money to make payments on the loans they’d taken out. The nine-apartment village, no matter how skillfully operated and managed, would never actually generate the funds to pay those loans, much less keep pace with general repairs and upkeep. The only income to offset the expenses was rent from the tenants, and “even if fully rented, it does not pay the mortgages and expenses,” the agency’s executive director said. “The numbers didn’t work, and they didn’t work from Day One. We told them (the note holders), to go ahead and foreclose. Take it.”

The vision

The village is a complex of one-, two- and three-bedroom apartments and a community center. There is a playground and commons area. As envisioned, the village apartments would serve domestic-abuse victims from Haywood, Jackson, Macon, Swain, Graham, Clay and Cherokee counties, along with those from the Cherokee Indian Reservation.

A decade later, however, and the dream is dead. The two note holders, the N.C. Housing Finance and the U.S. Department of Agriculture, are well into the foreclosure proceedings.

Adding to the problems: Insurance payments on the agency’s emergency shelter went sky-high after Bonnie Woodring, who was seeking protection from an abusive husband, was gunned down by John Raymond “Woody” Woodring in September 2006. He shot her inside the shelter after muscling his way in. Woodring later killed himself.

Additional security measures at the shelter were added in the wake of the shooting, another expense for REACH. It was critical that the agency reassure other domestic-violence victims they would find safe haven at the emergency shelter. Roberts-Fer said the shooting cast a long shadow over REACH: financially and emotionally, and that the legacy continues today.

There have been additional money woes: Water to tenants has been cut off at least once because REACH failed to pay the bill. The agency’s payroll was missed twice. Health insurance coverage lapsed for a time. Everyone kept working anyway, and eventually the agency’s employees did get paid — at least they did until about half of them were laid off as part of cost-savings measures. Today, there are seven fulltime REACH employees and two part-time workers. Additional staff reductions are likely, Roberts-Fer said.

Another, unidentified local nonprofit is weighing whether to continue offering low-income housing at the village, located just off N.C. 107 near Wal-Mart, but REACH wants shed of its role in the project. And as quickly as possible: Just keeping up with maintenance is proving too large a financial drain on the cash-strapped nonprofit. Selling it proved impossible because the village was worth less when appraised than what REACH owed on it, Roberts-Fer said.

As quickly as a new emergency shelter is ready, the agency plans to abandon the village lock, stock and barrel. The tenants in the village, she said, have been warned. Boxes of items are stacking up on the steps, waiting to be moved to the new location.

Bigger problems still loom

“Even then, though, we are going to be in trouble financially,” Roberts-Fer said.

The agency’s thrift shop is barely breaking even. Donations are down, and buyers don’t seem much interested in what items the REACH thrift shop does have to offer, she said.

Grants and other funding streams are drying up as North Carolina grapples with a shortfall numbering in the billions. And even more critical: A somewhat obtuse administrative detail on the state’s part, which is choking REACH’s finances, and is reportedly causing other nonprofits in North Carolina trouble, too.

The state once paid grant money upfront, apparently recognizing that the wiggle room for most small nonprofit agencies is marginal at best. No more — these days, payments don’t begin until about four months into the fiscal year, creating a cash-flow crunch.

“Last year, the only thing that got us through was a particular grant that gave us a little room to survive,” Roberts-Fer said.

That’s not how the situation is shaping up for fiscal year 2011-12, which starts July 1.

“Worst case, we won’t be able to function,” she said bluntly.

Why? There is no cash reserve. Zero. Nothing. Nada.

Banks, understandably, haven’t been eager to extend a line of credit to REACH. They’ve been turned down twice, even though one of the board members is an experienced banker. His bank, in fact, said no thanks.

Here’s the solution, perhaps the only means of saving REACH of Jackson County: A fairy godmother, or a slew of community donors, come up with a cash reserve for the agency of between $100,000-$150,000. This would give REACH the money needed to ride out the state’s Scrooge-like methods of doling out funds. Additionally, this three-month reserve fund would provide REACH the money needed in the future. The budget, Roberts-Fer said, would be stabilized.

“The board has already agreed we’d only use the money as cash flow against receivables,” she said.

Additionally, REACH is streamlining operations. Only essential, core services are being offered: the REACH crisis line, for example, the emergency shelter and legal advocacy.

“We’re determined that this will not be the last year for REACH,” Roberts-Fer said.

Times are tough, and in response Jackson County department heads have been ordered to reduce spending by 3 percent between now and June 30, the end of the current fiscal year.

Additionally, a hiring freeze will continue and the use of part-time employees will be curtailed as much as possible to save dollars, interim County Manager Chuck Wooten told the Jackson County Board of Commissioners this week.

Every county in North Carolina has braced for upcoming cuts as a result of the state’s $3.7 billion shortfall. But Jackson County is having problems just getting through the next few months, at least in terms of meeting its projected revenues and expenditures for the current fiscal year.

Wooten, who took over the county’s top paid slot in January on a temporary basis after serving as Western Carolina University’s finance officer for 30 years, crunched the budget numbers and determined Jackson County was facing a shortfall of its own: $336,004, to be exact.

Property taxes haven’t been collected at the rate projected, and the failure of residents to pay vehicle taxes compounded the problems, he said. Jackson County’s budget for this year assumed a property tax collection rate of 95.4 percent. The actual collection rate is running about .62 percent behind.

Wooten instituted these additional steps:

• Travel to conferences and for professional development will be approved only when it is necessary to maintain a license or certification. All travel must be approved in advance, and out-of-state travel is out, unless it involves licensing.

• Equipment not yet purchased has to be approved by Wooten before being bought, and the purchase won’t be approved unless it is absolutely necessary.

• Employees have been asked to avoid stockpiling supplies, and to buy only what is needed to get through the year.

County employees must submit lists of budget savings to Finance Officer Darlene Fox by Feb. 11, according to a memorandum sent this week by Wooten to department heads.

“In addition to these immediate budget actions, I will be evaluating other county policies and practices to determine if budget savings are available by implementing modifications,” he wrote.

Wooten warned county employees that the new budget for fiscal year 2011-12 would likely reflect an expected three to five percent reduction in tax and locally generated revenues, and to plan accordingly.

“It is apparent that our tax base will not increase at levels similar to past years,” Wooten wrote.

Macon County Schools, like other local school systems in North Carolina, has been warned by state leaders to plan for cuts that could mount as high as 15 percent.

Along with other county departments, the school system will have to make some difficult choices in the days and months to come, Macon County commissioners agreed during a recent work session. Such as tapping into the schools’ fund balance — broadly speaking, the difference between assets and liabilities on its balance sheet — to help reconcile financial needs with actual available dollars.

Macon County Schools Superintendent Dan Brigman said this week the schools’ current fund balance comes to about $3 million. This money, Brigman noted, includes certain money allocated last summer by the federal government.

“We have worked very hard in the Macon County school system to preserve the fund balance in preparation for the loss of (some state money) to be removed July 1,” Brigman said, which will create an immediate “$2.4 million deficit in our state budget allocations for Macon County as a result of these dollars being taken away.”

Also important to understand, Brigman said, is that additional cuts might well come from the state.

Hard times, however, might call for hard choices.

“I always sound like I’m down on the school board,” Commissioner Bobby Kuppers said, adding that he’s not against school board members — rather, Kuppers emphasized, he’s a big supporter.

However, Kuppers said, “their fund balance is our fund balance — the bottom line is, they can’t look to me for $2.5 million while protecting $3 million … we’ve got to be really smart, and really careful, about what we invest our fund balance in.”

Macon County Manager Jack Horton told commissioners a 15-percent cut by the state to local schools could translate to the loss of 5,000 teaching positions statewide.

Kevin Corbin, a long-time Macon County Board of Education member who stepped in to complete the final two years of commissioner-now-state-senator Jim Davis’ term, said he doesn’t believe the county’s fund balance would be well spent funding continuing expenses such as salaries.

“(But) if this year and next year we have truly bottomed out, then using the fund balance (to bridge the gap) isn’t a bad thing,” Corbin said.

“We’ve had to make some very hard decisions the last three years,” Commission Chairman Brian McClellan said. “It’s going to be more of the same, and nobody is exempt from that.”

Macon County Schools’ entire total budget to operate the school system is $31,579,444.

Most people predicted that this session of the North Carolina General Assembly was going to be fast and furious, and it appears that is indeed the case. The GOP-led General Assembly is advancing legislation that Democrats have traditionally not supported, like raising the cap on charter schools and opposing the federal health care law passed last year by Congress.

In addition, the $3.7 billion projected budget shortfall is also forcing lawmakers to look all over for money, a challenge that is also highlighting the different philosophies of both parties.

The Golden Leaf as a golden egg

It appears a move is afoot to snag money that is supposed to be headed for the Golden LEAF Foundation.

This fund was established from the tobacco settlement proceeds and is supposed to be used to promote the “long-term, economic advancement of rural, economically distressed, and tobacco-dependent counties.” That said, the $68 million annual settlement payment is being eyed by GOP leaders in the General Assembly as a piece of the deficit-reduction puzzle.

On Thursday, the Senate gave tentative approval to a plan that would take proposal that would take money from approximately 20 state accounts and the three funds supported by the 1998 national tobacco settlement — Golden LEAF gets half the tobacco settlement money, and two sister funds, the Health and Wellness Trust Fund and the Tobacco Trust Fund, share the other half.

The vote was 30-18 to take what would amount to about $142 million in all.

An email was sent out yesterday by the Golden Leaf Foundation president saying the idea was a bad one, and that other states have taken similar actions with bad results.

“That’s not the answer. Other states have used their tobacco settlement funds long ago to patch their budget. Now their money is gone, and they face the same issues we face but don’t have access to the assets you currently do through the Golden LEAF Foundation to create jobs and expand economic opportunity. Golden LEAF has helped create an anticipated 4,300 jobs and over $900 million in capital investments in the last two years alone, wrote Golden Leaf president Dan Gerlach.

A Western North Carolina source who is involved in an economic development project funded by the Golden Leaf Fund told The Smoky Mountain News on Thursday that conference calls were held around the region on Thursday to discuss the possibility the fund would be raided and ongoing projects might be stopped in their tracks.

So far this issue has been mostly split right down party lines, with Republicans supporting taking the money and Democrats — along with Gov. Bev Perdue — insisting the money stay where it is. Some Republicans have suggested that the Golden LEAF Fund should be dissolved and all of its $600 million in assets go toward deficit reduction.

N.C.’s own health care debate

Rep. Ray Rapp, D- Mars Hill, wrote in his e-newsletter that debate on repealing the federal health care law was one of the two dominant topics from the General Assembly’s first full week in session (the other was the economy).

Republicans in the House introduced and passed a bill to block the requirement in the federal health care law that requires everyone to buy health insurance by 2014. The bill — which passed essentially along party lines, 66-50 — would force Attorney General Roy Cooper to join other states in challenging the federal law.

“It only seems fair that we ask everyone to take personal responsibility for their own health by purchasing their own insurance so that we can require insurers to cover people with pre-existing conditions, allow young people to stay on their parents’ health policies until age 26, eliminate life time limits and provide tax credits for small businesses that want to cover their employees,” said Rapp, who has been appointed Democratic whip for this session of the General Assembly.

Rapp and other Democrats point out that the Attorney General has said it would cost $344,000 to join the suit, tough money to come by in the face of the projected budget shortfall. Both Rapp and Rep. Phil Haire, D-Sylva, voted against the bill. Rep. Roger West, R-Marble, voted for the bill.

In other General Assembly news

• As reported in the Asheville Citizen-Times Friday, Feb. 4, bills are progressing in both the House and Senate that would ban the practice of involuntary annexation, which forces residents near town limits into the town’s jurisdiction. Annexations typically mean additional city taxes and are usually accompanied by more services.

However, towns now have the right to grow their boundaries even if the residents to be annexed don’t support the move. These laws would ban that type annexation.

“I believe that people should have the opportunity to vote whether or not they should be included in an adjacent municipality,” said rep. Tim Moffitt, a Republican lawmaker from Buncombe County.

The bills would halt all involuntary annexations until July 1, 2012, during which time GOP leaders want to craft a new set of laws governing annexation.

• The Associated Press is reporting that Republicans are in support of a bill to lift the cap on charter schools and allowing proceeds from the state lottery to be used to build new charter schools.

State laws governing charter schools have changed very little since a bill passed in 1996 allowing for up to 100 charter schools in North Carolina. Because of the cap, charter school supporters say students in 53 of the state’s counties don’t have charter schools. The current 100 schools have a waiting list of 20,000 families, according to Darrell Allison, president of Parents for Educational Freedom in North Carolina.

Charter schools don’t charge tuition and have open enrollment. They are run by private boards and exempt from many of the rules that are in place in traditional public schools. The state money allocated for each student follows that student to a charter school, but so far charters have not received any lottery money.

Opponents also worry that lifting the requirement that enrollment in charter schools reflect the general racial and ethnic composition of a county could lead to problems. They argued for slowly raising the allowable number of schools rather than a blanket lifting of the cap.

“What I do not want to do is create a dual system of schools and charter schools,” said Sen. Malcolm Graham, D-Mecklenburg.

The bill is currently in committee.

Local boards are finding themselves on the wrong end of the dog when it comes to putting together budgets for the upcoming fiscal year.

In Jackson and Macon counties, at work sessions held by commissioners in their respective counties last week, much of the discussion at these relatively informal get-togethers involved speculation on when — and what — might be expected from the state General Assembly.

The state, as it were, would be the front end of the dog.

North Carolina is facing a projected $3.7 billion shortfall. Thousands of state jobs are threatened, with massive cuts expected to come for health and human services, schools and other critical services offered on the state and local level.

So, what does that mean for counties?

“There are certain things we have to provide,” said Evelyn Southard, finance officer for Macon County.

And not knowing how much money will come down the pike from the state complicates matters, she said. When counties will know the full extent of the financial devastation is unknown, but that knowledge is critical to local boards starting preparations on budgets for the next fiscal year.

Macon County Manager Jack Horton warned his board that even though members of the General Assembly are making happy noises about having their budget passed by the end of June, August is more typical, and the state has actually lagged before into October.

“We have to have the (ability) to take care of the county business whether the state gets their house in order or not,” said Horton, a veteran administrator who has also worked over the years in Swain and Haywood counties.

Jackson faces immediate shortfall

In Jackson County, officials were concerned about staying within this year’s budget in addition to preparing next year’s.

Jackson County must either slow its spending, interim Manager Chuck Wooten said, or the county must dip into the fund balance — those are the two choices facing Jackson’s commissioners. An across-the-board cut for county departments seems the most palatable option of the two, Wooten said.

The problem is not enough people are paying their taxes in Jackson County. A gap between the budgeted tax-collection rate for the current fiscal year, and the actual collection rate occurring so far is 0.62 percent off what was originally projected. Sounds tiny, but that adds up to big bucks: there is a projected revenue shortfall for the current year of $336,004, including failures to pay vehicle taxes.

The recession has taken its toll on all counties when it comes to people paying their taxes. Jackson’s budget for this year assumes a property tax collection rate of 95.4 percent. Last year, the tax collection rate was only 94.8 percent, but county leaders apparently banked on it coming back up.

Wooten said as a result this year’s budget is “too optimistic,” though he stopped short of assigning blame. Wooten replaced longtime County Manager Kenneth Westmoreland in January.

In response, Jackson County commissioners indicated they would probably become more aggressive in tackling tax scofflaws.

“Why have we not gone after this?” Jackson Chairman Jack Debnam asked, presumably of the only two (Democrats) commissioners who remain from the previous board.

Debnam then answered his own question: “I know, we’re a small county — they could be friends and relatives.”

New Commissioner Doug Cody, a Republican, warned his fellow members that favoritism must play no role.

“If we go down this road, it is important to treat everyone equally,” he said.

Macon County leaders, by comparison, were merry about having a mere $34,283 projected discrepancy.

“And I think there’s some room in here for our expenditures and revenues to be even better than is shown here,” Southard said.

In other state-local government news, the N.C. Association of County Commissioners last week passed a list of legislative goals the group wants state leaders to adopt. Beale, who attended the meeting, summarized the top five priority goals of the group:

• Oppose shifting road maintenance from the state to the counties.

• Reinstate Average Daily Membership, a formula that uses school enrollment to determine funding levels, and lottery funds for school construction.

• Ensure adequate mental-health funding by seeking legislation for adequate capacity of state-funded acute psychiatric beds; oppose closing state-funded beds until there is adequate capacity statewide, and seek legislation to maintain the existing levels of state funding for community mental-health services.

• Preserve the existing local-revenue base (don’t take money streams away from already-hurting local governments).

• Authorize local revenue options by allowing counties to enact by resolutions, or at the option of boards of commissioners, by voter referendum any or all revenue options from among those that have been authorized for any other county.