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North Carolina’s revenue and tax collections so far this fiscal year show an improving state economy that is still struggling to build up considerable momentum.

Through the first three quarters of the fiscal year, North Carolina’s general fund revenues have exceeded the state’s $14.3 billion revenue target by $110 million, according to a new report by the state’s Fiscal Research Division. Tax revenues are $126 million ahead of a $13.5 billion target.

But sales tax collections have been below projections, with the state taking in $90 million less than the $4 billion targeted through the first three quarters of the fiscal year. Non-tax revenues, which includes investment income and judicial fees, are also $16.3 million less than the state’s $513 million target.

The state will take in $232.5 million more than expected this year in tax payments, according to a revised revenue forecast by the legislature's Fiscal Research Division and the Office of State Budget and Management. 

For the next budget year, tax revenue is projected to be $21 million more than expected.

Marilyn Chism, head of the legislature's Fiscal Research Division, was forced to resign from the post this month.

The legislative leadership makes employee decisions for the top division jobs. Senate leader Phil Berger's office referred questions about Chism to the House. Jordan Shaw, spokesman for House Speaker Thom Tillis, said it was their policy not to comment on personnel matters. Shaw could not say who is now running the office.

The fiscal research staff is responsible for background work on the state budget, so this is their busy season. The staff also develops "fiscal notes," examinations of the costs or savings connected to proposed changes in state  policy.

Chism's removal sent waves through the state government complex and beyond.

It's the first time many can recall an employee being forced from a top division job, and Chism was the only woman and the only African-American to run a major legislative division.

State tax collections through February were above target, while non-tax revenue is falling short of projections, according to a new report to legislators on state revenue.

In all, money going to the state treasury is above target by less than 1 percent, according to the Fiscal Research Division report. The division's revenue and economic outlook reports are important to legislators as they try to predict how much money the state has for the upcoming budget.

According to the division, the state is expected to follow the nation's slow, steady recovery from the recession. High unemployment will continue to be a drag, and potential shocks include rising commodities prices and the European sovereign debt crisis.

The all-important report that will include details about April tax collections is due in mid-May.

State revenues are 1 percent lower than projections, according to a report by the legislature's Fiscal Research Division.

Revenue collections through the end of September, the first quarter of the fiscal year were $45 million lower than a $4.2 billion target, according to the report prepared by Barry Boardman, an economist for the legislature.

It's very early in the fiscal year and the most important indicators of whether the state can make its budget won't come until the spring. But the early decline suggests that the state's recovery from the recession will be a slog.

Revenue is down, generally speaking, because consumers are spending less and workers and corporations are making less money. Those declines mean the state is collecting less tax revenue.

Other states are doing much worse, according to the National Conference of State Legislatures. North Carolina's projected loss in tax revenue is currently less than South Carolina, but higher than Virginia and Tennessee, according to the NCSL.

A new law that raised age requirements for kindergarten will save the state $50 million in education spending next year.

That's just about all the good news about the state's public education budget.

Lawmakers attended a briefing on education spending Wednesday and there was plenty of bad news. The projected budget deficit next year, as much as $2 billion out of a $21.5 billion budget, will require a hard look at the few areas of education that the state can cut -- teacher salaries and class sizes.

Education accounts for some 54 percent of state spending. The bulk of that money, $8.19 billion, was spent on public education in the current fiscal year. 

The state allots money to schools using a formula based on attendance. The number of children in schools has grown steadily since at least 1999. The coming year will be the first time the attendance number has dropped, according to the legislature's Fiscal Research Division. 

The reason for the drop, said analyst Kristopher Nordstrom, is that the state now requires kindergarten students to be 5 years old on or before Aug. 31. Previously, students could turn 5 in September.

The one-year savings produced by that change will equal $50 million, Nordstrom said.

The federal stimulus package would provide $1.1 billion to the state for education. But there are strings attached, Nordstrom said. To get the federal money, the state would have to spend as much on education as it did in the fiscal 2006 year. That amount is 16 percent lower than the current education budget.

Enrollment growth at the state's universities and community colleges will cost nearly $100 million next year.

Legislators heard a briefing on the budgets for the UNC system and for the community college system on Wednesday.

Enrollment has swelled at the Community Colleges as the economic downturn has forced people to look for new careers and training, said Andrea Poole, an analyst in the legislature's Fiscal Research Division.

Enrollment, measured by calculating the equivalent of full time students, grew from by 2,348 students from fiscal year 2007 to fiscal year 2008. In the current fiscal year, enrollment grew by 6,250 to its current 201,625. There are 829,146 students taking at least some classes in the system.

That spike cost the state $23.8 million. Next year, the numbers are likely to rise even further and Poole said enrollment growth in next year's budget will cost as much as $47.7 million.

The state kicks in $1 billion of the community college system's $1.48 billion budget.

In the UNC system, enrollment is expected to grow by 12,399 students in the next two years, said Richard Bostic, a fiscal analyst. That growth will cost $44.8 million next year and $54.4 million in fiscal year 2011.

The state contributes 38.3 percent, or $2.9 billion of the system's $7.55 billion operating budget.

Education is the biggest expense in the state's budget and erasing next year's deficit will require lawmakers to seriously consider cuts to schools and universities, a fiscal analyst said Tuesday.

Legislators got a look at the reasons the state budget grows and Evan Rodewald, an analyst in the Legislature's Fiscal Research Division, included the difficult truth about education in his report.

Because education programs comprise most of the budget, some portion of future budget reductions will likely come from education.

The briefing was part of a series of updates on the state's budget picture.

How education spending adds up after the jump.

The legislature's economic wonks, the Fiscal Research Division, gave legislators another gloomy briefing Tuesday on the state's finances but this time focused a little more on the fiscal year that begins in July. And it'll be worse.

Up to now, lawmakers have been focused on how to cover a gap in the current budget of $2 billion, though it could go higher.

Fiscal analysts Barry Boardman and Evan Rodewald outlined how the recession will be deeper and longer than any since the Great Depression, meaning that the next year's budget, for July 2009 through June 2010, likely will have the same $2 billion gap plus as much as another $1 billion in expenses for which there is no money if legislators choose to try and fund them.

Those include an estimated $800 million for the health plan for state employees, $100 million for teacher bonuses, promised $39 million reduction in money siphoned from the highway trust fund and $200 million for enrollment increases at schools, community colleges and universities.

North Carolina could fall short of projected revenue by 10 percent.

According to a presentation on the budget outlook prepared by the legislature's Fiscal Research Division, the state could fall short of its expecations by approximately $2 billion.

Through December, tax collections were down 6.6 percent.

Particularly hard hit by the recession are three taxes that make up 86 percent of general fund revenues: the personal income tax, the sales and use tax and the corporate income tax. All three are directly tied to the economy.

But state budget officers won't know exactly how bad the recession has hurt tax collections until after April 15, when corporate and personal income taxes are paid for the year.

The presentation says it is "highly probable" that the state's tax collections won't return to the projected amounts until the 2010-11 budget year.