State budget picture brightens a bit
Posted April 12, 2010 2:19 p.m. EDT
Raleigh, N.C. — The state budget won't be in such bad shape in the coming year, after all, a fiscal analyst told lawmakers Monday.
The latest projections call for a budget deficit of $787.9 million for the 2010-11 fiscal year, which begins in July, Barry Boardman, an analyst in the nonpartisan Fiscal Research Division of the General Assembly, wrote in a memo to the heads of the House and Senate budget and appropriations committees.
State officials previously estimated a deficit of $700 million to $1.2 billion for the upcoming year, on the heels of the record $4.5 billion shortfall last year.
Because personal income tax and sales tax collections remain below forecasts, Boardman said, the revenue shortfall will likely be $702.9 million in 2010-11. The remaining $85 million of the projected deficit is tied to the expiration of the federal estate tax in January.
The federal government will reinstate the estate tax next January, but because it isn't applied in 2010, North Carolina will not collect a state estate tax.
In addition to balancing the 2010-11 budget, lawmakers must trim $391 million from the budget for the 2009-10 fiscal year, which ends in June. That deficit is about 2 percent of the $18.9 billion state budget.
Previously, the 2009-10 deficit was projected at $500 million.
Gov. Beverly Perdue last August ordered up to 5 percent of state agency budgets held back in anticipation of a continued weak economy. That money has been kept in a reserve account and should cover most of the 2009-10 shortfall, officials said.