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RALEIGH — Gov. Mike Easley may have hoped to spend the last nine months of his term on a political valedictory lap, getting a final package of legislation through the General Assembly while talking up economic initiatives and educational plans he holds near and dear.

Instead, he finds himself repairing a series of problems, including a drought that sapped water supply and a state mental health system that is widely acknowledged to have fallen into disrepair on his watch.

The News & Record spoke with Easley last week about several issues, including the failure of Skybus Airlines and the presidential election.

The state and local governments were willing to give Skybus millions of dollars in incentives. With the airline just having gone bankrupt, do you question whether the company was vetted all that well?

"That's always a risk in this changing economy because almost every CEO is having to navigate some type of storm or another. That's why almost all our incentives have clawbacks, so you don't get anything until the jobs are created and then, you only get them as long as the jobs are there. ... We don't have any investment in it except a lot of my time and Commerce's time. But that's OK. ...

"They or somebody else like them will be back. The one thing that the precess did (is) it demonstrated that's clearly the best location for any airline that wants to make those types of trips. Somebody will do it if Skybus doesn't recoup."

So, again, do you look at whether the company's business model was sound before giving it state support?

"The biggest problem is the price of oil and the weakening dollar. ... There are going to be a lot of companies that can't withstand that. ...

"We like to think the company is healthy and sound, and they were. We let them determine what risks they can take because we don't have any costs in it. They don't get anything from us unless they produce a job. ...

"We've only had this happen twice. ... Philip Morris couldn't perform and they didn't get their (incentives). That was in Concord."

Another company that has used state incentives several times is Greensboro-based RF Micro Devices, which just announced it was sending 80 jobs to China last week. It has nearly 2,000 jobs here, but does that concern you?

"All of these companies that are in some form of manufacturing ... whether it's RFMD or furniture, they're going to offshore the low-skill jobs. So those jobs that can be done with low-skill/no-skill are going to be done overseas. The ones that will be done here are the ones that require KTS — Knowledge, Talent, Skill. ...

"The out-migration of jobs is not over ... and I don't like to see 80 jobs go to China. But remember in 2001 and (2002) and (2003), it was 3,000, 5,000, 7,000 at a whack. So we're at least at a point now where we're seeing dribbles, and we can absorb those.

"When (RF Micro) comes back to us, they come back with more jobs. If they have more jobs, then we're interested in partnering with them. ...

"They don't qualify if they couldn't stay here or come here but for the grant. And that's something that gets vetted pretty closely. ...

"We get access to the other locations, what the other locations are offering and generally we don't have to offer (a lot) — take (RF Micro) for example. If they're already here and they want to stay here, and another state is offering them on a scale from 1 to 10 a 10, (then) we can just give them a 5 and they'll stay here."

The state's mental health system has encountered a series of problems since reform started during your first term. A key component of your plan to rebuild the system is to reduce the number of local administrative entities, such as the Guilford Center. Why is that so important to you?

"We used to do this with eight divisions across the state. I feel like we could go to five. Now here's your problem: with 25 different (local management entities) some of them are fantastic and some of them are awful. You have a lack of uniformity, too much administrative costs. ..."

Department of Health and Human Services Secretary Dempsey Benton has "got to have something we can manage and save the most dollars. ... But the (local management entities) shouldn't be concerned about that. We want to do things that make it easier for them. We want to give them more tools so they can do their job better but also some accountability so if the job is not getting done, if the state is going to be held responsible for it and we should, then we have to be able to manage it."

Easley said mobile crisis teams, more state-funded psychiatrists and streamlining administrative procedures would improve work for local mental health officials.

"You can go one of two ways. You can take the private providers that are out there, or you can go hire all state employees or county employees. Or you can do a combination. I think what we're moving to is more of a combination.

"The problem we're seeing with some of the private employees is Friday, 5 o'clock, they're gone. If someone has a blowup, or trauma ... well, the (local management entity) just institutionalizes them and sends them to the hospital. So we've ended up with more coming to the hospital rather than fewer and the whole concept was to get people out of their institutions and to try to deal with them in their community. ... So there's a place for contracts with private providers. ... But we do need people who are directly responsible to and can be hired and fired by the (DHHS) secretary."

Sen. John McCain has proposed suspending the federal gas tax as a way to stimulate the economy. Republican candidates for governor have embraced this idea for the state gas tax. What do you think?

"We've capped ours ... and as a result of that, there's no money for roads. The people need to be told the truth, and that is the price of gas is going to go up and up and up, and there's nothing that the state government can do to stop that.

"What the state government can do is encourage the federal government ... to act. But we're also working on a lot of things."

Easley said he believed a new effort at N.C. State to build a better electric car battery could help the state and the nation reduce costs paid for fuel.

"There's really no alternative but to get off of oil. ... The country, America, has to be far more aggressive. So we're trying to do that with efficiencies and alternative fuels."

The poor economy is affecting tax collections. Are you going to have another budget crisis on your hands like the first couple years of your term or not be able to pursue some of your plans for the final year?

Easley said that the state would have to revise its budget projections but that North Carolina still has a surplus.

"I may not know much, but I know that budget. I got a Ph.D. in budget in '01 and '02. ... I can tell you how many school buses we're buying each year. We know where we can make cuts; we're already working on that.

"We know we have to take teachers' (salary) to the national average this year. ...We'll be able to continue to make the progress we need to make. There won't be any cuts in education.

"But the main thing I want to be sure of is that the budget is balanced when the next governor comes in. The next governor should have a balanced budget. I would like to have a surplus and close to a billion dollars in a rainy-day fund."

Water-supply systems are full and local governments are backing off restrictions. How do you plan to keep water resource planning from falling out of the public's consciousness?

Easley said the state would continue to reach out to the public through ads and its Web site, http://www.savewaternc.org.

"You have to keep the drought in people's minds. ...We got some rain recently, but the entire state, every county, is still in drought and half the state is in extreme drought," Easley said.

He spoke before the latest drought map revision, which shows all of North Carolina rated at least "abnormally dry" and half the state in the "severe drought" category.

"The legislation we're going to get passed this time will give us a tremendous amount of authority," Easley said. If his proposal clears the legislature, the new governor will have the ability to impose restrictions on water systems that are not following conservation guidelines.
"So we won't have anybody abusing, including wells. ... I want to be drought-proof when I leave office."

You're a superdelegate. When are you going to make a choice between Sens. Hillary Rodham Clinton and Barack Obama?

"I hope I don't have to. I was hoping it would be over before it came to North Carolina. Because I have never gotten involved in a primary when I was in elected office. ...Whether I would in this race, I don't know. I'll wait and see what happens."

Contact Mark Binker at (919) 832-5549 or mark.binker@news-record.com