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Ex-Governor’s $80M Transfer Wasn’t Legal

(CN) - Former North Carolina Gov. Michael Easley did not have the authority to transfer $80 million from the state's highway trust fund to the general fund in 2001, the state Court of Appeals ruled.

A class action led by W.D. Goldston Jr. and James E. Harrington challenged the governor's action, along with another $125 million that was appropriated by statute from the highway fund to the general fund.

The citizens argued that the fuel taxes, title registration fees and highway taxes they had paid were illegally diverted to an improper use.

The trial court confirmed the legality of both transfers. On appeal, Judge Hunter upheld the statutory transfer, because the Legislature had repaid the "loan" to the highway trust fund by fiscal year 2006-07.

However, Hunter ruled that the governor's transfer was illegal.

"[T]he action of the governor in transferring $80,000,000 ... without awaiting legislative action is that the transfer does not effect an economy, to wit: it does not reduce spending or diminish the deficit," Hunter wrote.

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