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.

The tax cuts included in the federal stimulus package would cost North Carolina less than state officials initially thought last week.

Barry Boardman, an analyst for the non-partisan Fiscal Research Division at the legislature, outlined for lawmakers Wednesday how the state would lose $585 million over two years if they conform state tax laws to the federal changes, as they typically do. Much of that money is through tax breaks for businesses.

Last week Department of Revenue officials, who were given an extraordinarily quick turnaround time of a few hours, estimated the loss at about $760 million. Boardman said his office, given more time, adjusted for several factors, including that the state and federal government operate on different fiscal year calendars.

Legislators now will have to decide whether to alter state tax laws to mirror the federal changes. They chose not to copy federal tax breaks during the economic downturn in 2002, which complicates tax filing, particularly for businesses.

State revenue continues to fall.

Through November, tax collections are down 6.1 percent, according to a report released by the legislature's Fiscal Research Division. Through October, revenue was down 5 percent. Budget forecasters say it's too early to know how deep the hole will be.

The report, prepared by Barry Boardman, an economist with the Fiscal Research Division, states that through November, total general fund revenue is $520 million below a projected $7.2 billion.

Boardman's report also seeks to put the current recession in context.

In fiscal year 1982, a national recession led to a drop of 9.2 percent in the state's revenue. In fiscal year 1991, a national recession cut the state's revenue by 8.1 percent and in 2001, a recession led to an 8.8 percent drop in the state.

The state's current budget is $21.5 billion.

Boardman cites weak housing markets, tight credit and job cuts as some of the causes for the revenue loss.

When lawmakers and the governor write a state budget, they'll have to cope with a revenue shortfall and increased costs.

The report states that the state Health Plan will need $200 million to $300 million and that medicaid costs and college enrollment are expected to rise, as they often do when the economy is down.

Correction: A previous version of the post misstated the report's description of tax collections and total general fund revenue. It also mistated the projected revenue to date.

State revenues are down 5 percent through October.

According to a report released Friday afternoon by the legislature's Fiscal Research Division, state revenues are $320 million below the $6.3 billion target set through October. It's still too early to say what next year's budget deficit will look like, but most signs say it will be big.

"We've really got some weaknesses in our economy-based taxes and when you look forward that weakness is not going to turn around soon," said Barry Boardman, an economist with the division.

The revenue shortfall could reach $1.6 billion, said Rep. Mickey Michaux, a Durham Democrat and a key budget writer in the House. Lawmakers are going to have to make serious and deep cuts, he said. The good news, Michaux said, is that the budget can be balanced without raising taxes.

"We're going to have to do a lot of things that are going to be sort of hurtful," Michaux said.

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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.