N.C. lawmakers told of worsening fiscal picture

Fiscal analysts told lawmakers Wednesday that they will have to find an additional $3.1 billion in savings or tax increases to close a widening budget gap for the next two fiscal years.

Posted 2:35 p.m. May 6, 2009 — Updated 12:50 a.m. May 7, 2009

RALEIGH, N.C. — North Carolina government budget writers have received more bad news about the state's revenue picture – what economists say is proof that the state is in its worst recession since the Great Depression.

Fiscal analysts at the Legislature said Wednesday that lawmakers will have to find an additional $3.1 billion in savings or tax increases to close a widening budget gap for the next two fiscal years, beginning July 1.

The gap is now projected at $4.6 billion.

Economist Barry Boardman told a joint House-Senate committee that the April 15 tax collections were worse than expected – down 40 percent – and created a direr fiscal situation than forecast.

Revenues are expected to be 10.8 percent less this fiscal year than the year

before. That is an unprecedented figure, Boardman said. The next largest previous decline was 6 percent in 2001.

"I think we're all in a state of shock," Sen. David Hoyle, D-Gaston, said. The Senate sent the budget to the House four weeks ago.

"I don't know if the people of North Carolina really realize how bad this really is," he added.

Last week, Gov. Bev Perdue ordered an across-the-board pay cut of one-half percent for state employees to help find an additional $1 billion to balance the current year's budget by June 30.

Hoyle said it's likely Perdue's moves are just the beginning.

"There's going to be other things coming that a lot of people are not going to like," Hoyle said.

That's a major concern, state employees said.

"Budget-wise, we don't know whether we'll be state employees anymore or whether there will be furloughs or layoffs," state Department of Transportation employee Raj Pavani said.

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