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JACK FLEER:

One of the things that I take from what you were saying is that in a sense, once you learned more about the budget, or maybe budget developments became revealed after you were elected, you realize there was a lot "surplus money" and so you were looking for legitimate projects, nonrecurring. What does that say if anything about how well people who run for public office are prepared to run the public office?

JAMES E. HOLSHOUSER, JR.:

Well, a lot of times they are not very well prepared. Now business people if they are running a pretty good size business have had to deal with budgets and how they operate their own business and there is some carryover there, but not totally in that the state government has some operations that are not ever going to be profit centers. We had a report here at the Board of Governors yesterday and today about a North Carolina hospital and the consultants were saying that there has been a 4.8% return on the state's dollars that have come in since 1990 or something like that. And I told them after the meeting, I said, I don't think you are going to find the average legislator that is going to relate to that because they are not use to thinking in terms of monetary return on their dollars. They are used to providing money for operating agencies that have a product they turn out that doesn't make a return. So there is little bit different mentality and you also have some different rules under which you operate the state. You have got, you are required to go out for bids on things and take the low bid unless there is some reason to do otherwise and where business people really feel constrained on things like that. Unless you understand how the state government works in terms of having a surplus at the end of the year, some of which is going to be from revenues exceeding what was estimated and that is recurring money and that is available. Some of it is going to be unspent money and that can't be spending in recurring because it won't recur. So there are some practices that take people awhile to figure out. You get a lot of help. I have to say that I can't compare with anybody else but for me I got an extreme amount of cooperation from people in the government. Now part of that may be just been fear. I found early on I had to really be careful about what I said to people lest a thought be taken as something that had to be done right now. But the people in the budget office, people in the Council of the State, went out of their way to accommodate. Part of that was that I knew a lot of them already. And I knew at least a little bit about what they did and what went on in those shops and I talked to the budget people just countless hours as a legislator on the appropriation committee because in those days the budget office was in the Department of Administration. It was really considered apolitical and not the arm of the governor necessarily but worked for the governor and the legislature. Now you have legislative fiscal research over here and the budget office is in the governor's office and they don't always see eye to eye and I think that is more like Congress, but I think it is not necessarily for the best. I don't think we are going to change that. I think that genie is out of the bottle. But it is not to say that any of the people that work there are bad or anything. I think it serves the state better probably to have one set of voices.

JACK FLEER:

Now one of the practices that was in effect when you became governor was that the outgoing governor, in your case Governor Scott, actually prepared the budget.

JAMES E. HOLSHOUSER, JR.:

That is right.

JACK FLEER:

What do you think of that idea? How did that effect your ability to be governor?

JAMES E. HOLSHOUSER, JR.:

Well it my case as I said, I sort of lucked out in a way because if they had proposed a budget that took up all the money, I would have had to be proposing cuts in that budget in order to do anything I wanted. I felt strongly enough about that as a problem though generically that when Jim Hunt was elected in 1976, I met with him a week after the election. I said I want you to have some of your staff people to get with the state budget people before anything goes to the Advisory Budget Commission. If you have got some things that you want to put into the budget, we will get them in there. Because it seems to me that when the people have elected a new person, they are bound to have some programs. It just makes sense that they ought to have the prerogative of doing it.

JACK FLEER:

You had not been brought into any anticipation and preparation of Scott's budget?

JAMES E. HOLSHOUSER, JR.:

That is right. And it is not to say that Bob Scott should have because it was sort of a new situation there too. I think that if you look back at the administration previously, he had not been particularly plugged in with Dan Moore and Dan Moore and Terry Sanford hadn't been on the same side. Terry Sanford hadn't been close to Luther Hodges and if you just go on back and there has been sort of a history of each person doing their own thing. But I can say this from what I have heard from other states. We do extremely well in transitions. I have just heard some real horror stories of outgoing administrations not providing any assistance to the governor elect and not letting anybody in the state government talk to the new people until after they have gotten out of office. And of course, in elections when an incumbent governor gets beat when he is running for re-election that is much easier to understand from a human stand point. Somewhere along the line you ought to let your sense of responsibility to the state say that you have got to do it as a decent transition thing. I think we have done generally good.

JACK FLEER:

Would you recommend any kind of change in that relationship, that may be even put into law, or that the out going governor essentially recommends the budget to the first general assembly of the incoming governor?

JAMES E. HOLSHOUSER, JR.:

Well, I confess I haven't stayed up nights thinking about this and my notion is that you don't get to be governor until you are sworn in. At the same time somewhere or another that first budget that goes to the legislature really ought to be the incoming governor's. You can't give him power before he takes office. It may well be that what we ought to do is to have that first session of the legislature start about the first of March and let that budget process and not have the budget go to them and come in January the budget is already printed and it is in black and white sitting in the state warehouses some place. So I think you don't want to deprive the outgoing governor of the right to stay governor as long as he is in office but at the same time I don't think you necessarily have to give him the prerogative of presenting that in that budget. So I think that might be the way to do that just every fourth year have the legislature meet in March.