State surplus bigger than estimated

ryanteaguebeckwith — Wed, 07 May 2008 12:13:01 -0400

State lawmakers may have a fatter budget surplus than they originally thought, though it remains far less than in previous years.

Economic analysts with the state legislature's Fiscal Research Division now estimate that lawmakers will have a budget surplus of about $150 million for the new fiscal year that begins July 1, Dan Kane reports.

Last month, the budget surplus estimate had dropped to as low as $15 million as economists feared the slowing economy was leading to a significant drop in tax collections.

But the new report released today indicates that April's income tax collections exceeded expectations, giving lawmakers more room to breathe as they fashion a state budget that is expected to reach $21 billion.

"April revenues came in ahead of target and year-to-date collections are now $90 million ahead of forecast," said the report.

The report said that the housing recession, rising energy prices and the free-falling financial sector are the main drains on the state and national economy. "They are taking a toll on consumer spending," the report said. "It will be well into 2009 until the effects of these shocks have dissipated."

Barry Boardman, an economist on the legislative staff, said conservative estimates for economic growth have helped keep North Carolina from ending up with a budget deficit for this year. The report indicates that fiscal staff have revised their economic growth expectations further downward for the 2008-09 fiscal year from 4.7 percent to 3.5 percent.

In the past two years, budget surpluses had been as high as $2 billion.

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State surplus bigger than estimated