Local Politics

State says hold on tight for your tax refund

The state Department of Revenue is issuing tax refunds at a slower rate to help the state manage its cash flow amid declining revenues and an increasing budget shortfall, officials say.

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RALEIGH, N.C. — Dwindling revenue and a widening budget shortfall mean that North Carolina taxpayers will wait longer for their tax refunds, Secretary of Revenue Kenneth Lay said Thursday.

The state is not issuing refund checks to taxpayers as quickly as planned because the recession has state revenue flowing in slower than usual, Lay said.

"We have a temporary backlog due to the fact that we're having difficulty garnering funds that we're using to manage cash flow," he said.

In January, state revenues fell 14.3 percent from the same month a year ago, including a 21.4 percent drop in personal income tax collections, according to the State Controller's Office. General operating revenues were down about 6 percent for the first seven months of the fiscal year, which runs from July 1 to June 30.

The latest projections call for the state budget deficit to hit $2.2 billion by June and easily top $3 billion in the 2009-10 fiscal year.

James Barefoot, of Raleigh, said he has been waiting on his refund for more than a month. He said he plans to use the refund to pay for medical bills from a recent surgery.

"A lot of people were relying on this money to get some bills and stuff paid off, and it's like the money is being held hostage," Barefoot said.

Lay said the delay in issuing refunds does not mean that the state doesn't have the money to pay them. Instead, the state is trying to avoid depleting its funds too quickly.

"The concern is making sure the refunds are going out expeditiously as possible so that everyone who's due a refund will get a refund, but also measuring (the state's cash flow) carefully," Lay said.

Some refunds have already gone out, and the Revenue Department is sending out checks weekly, Lay said.

Revenue department officials could not say how long it might take to speed up the process.


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