A unanimous N.C. Court of Appeals panel has ruled in favor of state workers who sued over Gov. Mike Easley’s decision to divert money from the state pension fund to plug a state budget hole back in 2001.
Though the state started paying back the diverted $130 million once state finances improved, the workers’ suit contended the diversion was illegal.
A trial court agreed with the workers, and Judge Linda McGee’s appellate opinion upholds that trial court ruling:
We agree with the trial court and with Defendants that the
avoidance of a constitutionally prohibited budget deficit is
clearly an important public purpose. However, we also agree with
the trial court that the escrow of the funds in the present case
was not reasonable and necessary to achieve that purpose.
Later, McGee points to other actions that would have been constitutional:
[I]n the present case, instead of seeking a tax
increase or cuts in other State programs that did not enjoy special
constitutional protection, Defendants diverted the employer
contributions to the Retirement System. Our Court cannot say that
this diversion, which impaired the contractual right of Plaintiffs
to a retirement system funded in an actuarially sound manner, was
reasonable.
If this ruling stands, the governor and legislature would have a hard time in the future using employer contributions to workers’ pensions as a means of shoring up the state’s bank account.
