State budget again facing bumpy road

Although lawmakers cut programs and raised taxes last summer to erase a $4.5 billion deficit, budget analysts have forecast a shortfall of about $500 million in the 2009-10 fiscal year because of lagging income tax and sales tax revenue.

Much of that gap can be filled by money Gov. Beverly Perdue ordered held back from state agencies last August in anticipation of a continued weak economy. Perdue kept up to 5 percent of the money approved in the budget for most agencies in a reserve account.

Senate Finance Committee Chairman David Hoyle said the budget for the 2010-11 fiscal year is of greater concern for lawmakers. Early projections place the shortfall for the fiscal year that starts July 1 at $700 million to $1 billion.

"We're looking very closely at our projected revenues," said Hoyle, D-Gaston. "We've got some real challenges coming. There's going to have to be some cuts made because I don't think we're going to raise any more taxes."

Last year, lawmakers raised almost $1 billion in new revenue through a sales tax increase and higher taxes on cigarettes and alcohol.

Hoyle said no one wants to raise taxes again with elections scheduled for November.

"We've got a mess," he said. "You're going to have to cut everything. You're going to have to cut education. You're going to have to cut across the board. You're going to have to cut health and human services."

Hoyle said his only consolation is that he isn't seeking re-election in the fall.

"I don't envy any of my colleagues – Republicans if they gain any seats or Democrats if they maintain control," he said.