Uncertain Fiscal Future for 2007 State Budget

The legislature has been back in session less than a week, and lawmakers are already tossing around ideas for the next state budget.

The state won't see a big surplus like the one collected last year. Even though state tax revenues look solid so far, there will be budget struggles after rising healthcare costs, state employee raises and a long list of education and road requests are factored in.

Lawmakers sat Tuesday and listened as legislative fiscal analysts laid out revenue projections.

Six months into the fiscal year, the news was good. North Carolina has collected $285 million more in tax revenue over projected forecasts.

Analysts were quick to warn the vast majority of that increase comes from one-time corporate tax settlements. They also foresaw a very uncertain economic picture for 2007, especially with the state's real estate slowdown. Lawmakers have been looking for ways to fill holes.

“We had a billion-dollar hole in the budget with recurring funds that we've used one-time money to fill,” said Rep. Jim Crawford, D-Granville. “The revenues have come in better than projected, which is hopefully going to take care of half of that deficit.”

“As far as the structural deficit, I think what we need to do from day one is sit down, bring in agencies one by one and let's go over this thing line by line,” said Rep. John Blust, R-Guilford.

The next step will be the governor's budget plan, which is due to be released in a few weeks. It’s still unclear whether sales and income tax hikes will be allowed to expire, and how many statewide bond plans will survive.