North Carolina's unemployment rate will reach 12 percent, predicts Harry M. Davis, economist for the N.C. Bankers Association and a banking professor at Appalachian State University.

North Carolina now ranks fourth in unemployment, he said.

The state's economy is suffering more than the nation as a whole, because the state still has a large manufacturing sector, Davis said in a news release from the bankers this morning. North Carolina's manufacturing base diminished substantially over the past decade, while high-tech, health care and finance have grown. Despite that shift, the slowdown in global trade has hurt the remaining manufacturing businesses.

"We can expect our unemployment rate to rise to 12 percent soon," Davis said in the release, "and continue to rise into next year."

On the brighter side, Davis said the housing market may be near the bottom, and commodity prices have stopped dropping, which are both positive signs.

Gov. Beverly Perdue met with the state's Congressional delegation in Washington this morning to discuss an economic stimulus package.

After meeting with members of President-elect Barack Obama's transition staff, Perdue talked individually with Rep. G.K. Butterfield, Rep. Mel Watt and Rep. Heath Shuler, Rep. Mike McIntyre, Rep. Sue Myrick and Sen. Richard Burr and Sen. Kay Hagan, Ryan Teague Beckwith reports.

Perdue also met with U.S. Rep. David Price, who also organized the full delegation meeting.

Wednesday was Perdue's 62nd birthday.

"This is the gift they can give me on behalf of North Carolina," Perdue said.

Perdue also held a closed-door roundtable with several members of Congress. Perdue said she is asking for federal money to start "shovel ready" projects as well as short-term support for ongoing needs in the state budget.

"I can find a billion dollars. I found it yesterday," Perdue said. "I can tell you pretty quickly where I'm going to go first to find a billion dollars of our shortfall. I can't find another billion dollars."

Perdue is not saying yet where she plans to cut from the state's $21.5 billion budget. Economists predict the shortfall caused by a national recession may be as large as $3 billion.

After her meetings are done, Perdue plans to fly back to Raleigh to have a birthday dinner with her husband, Bob Eaves.

Correction: Post inadvertently left out Price. Sorry about that.

Senate leader Marc Basnight said he expects the budget process to go by quickly this year.

"We're going to write it quickly, get the job done efficiently and get out of town," Basnight said, of the budget and legislative sesion, which begins Jan. 28.

The Manteo Democrat said he has met with the Senate leadership and has had conversations with Gov. Beverly Perdue, who ordered budget officials Tuesday to prepare options for slashing spending.

Basnight said that Perdue called him Tuesday to tell him she was planning to sign her order.

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.

Gov. Mike Easley, warning of a spike in unemployment, has asked state agencies to ready plans to cut 3 percent, 5 percent and 7 percent.

In a memo sent Wednesday to all state departments, institutions and agencies, Easley warned that the nation lost more than 530,000 jobs in November.

"Reducing agency expenditures will be an essential component of providing a balanced budget to Governor-elect [Beverly] Perdue and the General Assembly," Easley wrote. "Those of us who have led state agencies for the past eight years are in the best position to create options for the incoming administration. You successfully completed this duty in 2001-2003 and I am confident you will do so again."

The governor is required to take steps to keep the state's budget balanced. The state has already seen a drop in revenue, although forecasters say it's too early to know how big of a hole the legislature will have to plug. Some analysts peg the deficit at $3 billion.

Easley's memo gives agencies until Jan. 14 to develop plans. Agencies are to give priority to services required by law or that reflect the agency's core mission. Agencies cannot cut back on capital projects, which would create jobs.

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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