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 state's revenues dropped $286 million or 14.3 percent in January compared to the same period last year.

The news was released Monday in a report by state Controller David McCoy.

"Revenue growth is slowing dramatically," McCoy said in a news release. "This decline was expected, and the state's financial plan was adjusted, but we are continuing to feel the strain of budget pressures." 

According to McCoy's report, personal income tax collections accounted for the nearly all of the loss in revenue for the month. McCoy also reported that investment earnings declined by $16 million, or 89 percent. State spending is down by 1.7 percent. Education and health and human services spending, the largest category of state expenditures, was 5.6 percent higher in January.

Perhaps a reflection of all this bad news, sales and use taxes, alcohol and tobacco taxes grew by $42 million or 8.5 percent in January 2009.

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 lottery officials, who have enjoyed strong sales in a struggling economy, expect next year to be a bit tougher.

In a conference call with members of the Lottery Commission this morning, lottery director Tom Shaheen said he and the lottery staff project next year's ticket sales will be down slightly from the current year. Shaheen said officials anticipate selling $1.252 billion worth of lottery tickets in the next fiscal year. If that projection holds, it would be a $16 million dollar decrease from the current year's $1.268 billion budget.

"I believe this is a responsible number," Shaheen told commissioners.

The lottery is on track to meet its sales projections for this year, which would raise $386 million for education programs. If next years projections hold — and Shaheen said it's hard to predict in such a volatile economy — the lottery would raise $376 million for education.

This year, even with high gas prices, the lottery enjoyed strong sales. Today, the lottery will make its quarterly transfer for education programs. The figure will be a record for the two-year-old lottery: $99 million. 

Gov. Mike Easley said Tuesday that the faltering economy may soon mean more tightening to state spending.

Easley spoke to reporters after a meeting of other elected state officials. He said he hasn't seen September revenue numbers yet.

"Given all the uncertainty, I wouldn't be surprised to see us move a little more with state agencies," Easley said. "I wouldn't be surprised if we went from two to three (percent)."

Easley previously ordered state agencies to hold back two percent of their budgets. That order, plus some others cuts Easley ordered total about $700 million in savings, Easley said.

Easley says he is trying to spare the next governor the massive budget shortfalls he inherited when he took office in 2001.

"It's a whole lot easier to be Gov. Santa than Gov. Scrooge and when the next governor comes in, if I have held back too much they they're able to release that money to the agencies and to projects and that would be good for them.

It's hard to fathom how big a number 21.5 billion really is.

Try counting it this way: $678 per second. That's the figure you get if you divide $21.5 billion by the number of seconds in a year. It's how the state Republican Party wants people to think about the $21.5 billion budget proposed by Gov. Mike Easley. The party has launched a site that ticks up the dollars by the second.

"When you see it in real numbers, I think that makes it come to life, just how much government has grown in North Carolina in the last five to 10 years," said Brent Woodcox, a spokesman for the state Republican party.

There are obvious problems with the math here. Not all of the state's revenue comes from tax dollars or from individual taxpayers. And not every North Carolinian pays the same amount. Nor does all the money come in at equal amounts over the course of a year.

The state's tax collections are decreasing, a sign that an economic slowdown is hitting North Carolina.

Revenues are running slightly — about 1.25 percent — ahead of projections, according to a Feb. 13 report from the Fiscal Research Division, a nonpartisan staff for the legislature. But tax revenues are slowing. The state has $140 million more than it anticipated at this point, the report states, because officials expected a slowdown and were conservative with projections.

State Rep. Jim Crawford, a chairman of the House Appropriations Committee said that what little "extra" money there is won't go far in a state budget that exceeds $20 billion.

"It can go in a heartbeat if the economy turns down," Crawford said. "We're absolutely dependent on the economy from here on in."

For example, the state must still come up with $100 million to pay for teacher bonuses at the end of the school year, said Crawford, a Granville County Democrat. Crawford said the state budget can likely withstand the economic slowdown, but legislators may have some work to do when the session begins in May.

"I don't think we're going to be in trouble, but I think we're going to have to tighten our belts a little bit," Crawford said.