Budget forces Easley to grow into his job.

• Author: Cline, Ned
• Position: Capital

Shortly after being elected governor three years ago, Mike Easley called childhood pal Ken Thompson, the CEO of what is now Wachovia Corp., with a question: "What should I do about this state budget problem?" The Republican banker's reply was succinct. "He told me to batten down the hatches because it was not going to be easy or fun." Good advice, though neither likely realized just how prophetic it would be. Easley and Thompson grew up together in Rocky Mount, where they bumped heads on the football field. Those were mild knocks compared with the hits Easley has taken as governor--without a helmet.

When Easley was elected, the state's budget crisis was not well known across the state. A lot of people in Raleigh knew, but most kept quiet or pretended it didn't matter. Ignoring the problem didn't solve it, and now it definitely matters. "I got a Ph.D. in budget pretty quick," he says with a grin. He could also use a degree in psychotherapy as he tries to wean legislators and bureaucrats from their spending binge. As he readies himself for next year's re-election campaign, Easley is walking a political tightrope, trying to balance state needs with financial reality.

There's a lot of nostalgia in Raleigh for the good old days of the '90s, when state revenue was pouring in higher than projected. Jim Hunt, eternal optimist and chief state cheerleader, was governor, determined to make every government program better--and, in the process, often bigger. Revenue soared, but spending flew past it as lawmakers feasted on pork-barrel projects as if they were Lexington barbecue. "I tell people that was the last century--literally and figuratively," Easley says.

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When the boom went bust, the state's financial faucet ran dry. But if legislators want to know whom to blame, they need look no further than the mirror. There is growing evidence, here and across the country, that state budget problems have less to do with economic conditions than the inability of elected officials to manage the public's money. Record spending and sizable tax cuts stacked atop sagging revenue put us where we are now.

Easley is diplomatic when discussing the predicament he inherited: His relationship with lawmakers, even fellow Democrats, has seldom been harmonious, but he has to work with them on solutions. He takes pride in sticking to and getting money for his education initiatives, which he touts as investments in the state's economic development. But he...