Economy may rebound, but not budget

Submitted by ryanteaguebeckwith on March 11, 2009 - 10:01am.
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Charlie PerusseThe good news? The economy may rebound by 2010.

The bad news? State government won't get more tax revenue then.

During a half-hour presentation on the state's economic situation, Gov. Beverly Perdue's budget director, Charlie Perusse, said that the state will likely end this year with a $2.2 billion shortfall.

That would be 10.6 percent below the amount the state budgeted, or 5.9 percent less than it received in the last fiscal year. That would be the largest year-to-year drop in state revenue in the records available, which date to the 1970s.

In the first eight months of the year, the state already has seen revenue drop by $1.2 billion. The second billion is projected through the next four months, in part because April and June are normally big tax-collection months.

Perusse said that the economy would rebound by early next year, but tax collections will lag behind, likely staying flat in next year's budget.

"Employment and the market will stabilize, but it will take six months to a year for revenue collections to actually catch up," he said.

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Re: Economy may rebound, but not budget

Submitted by Thinking on March 11, 2009 - 1:41pm.

The state doesn't fund college sports or pay coaches salaries, not the big dogs anyway.

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Re: Economy, Revenue and Budget

Submitted by ryanteaguebeckwith on March 11, 2009 - 11:05am.

If the economy rebounds, then more tax revenue will be received, both because more people are back at work, and because businesses are making a profit.

You're right, but you're missing the point. The fiscal year begins in July, and he doesn't anticipate the economy rebounding until early 2010. 

Given a lag of several months between a better economy and increased tax revenue, there won't be additional revenue by the end of the budget year.

— RTB 

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Re: Economy may rebound, but not budget

Submitted by igliigli on March 11, 2009 - 10:41am.

Save the state budget over 200 million every year.
Fire all the UNC System coaches.
College sports, the biggest taxypayer and student rip-off around.

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Re: Economy, Revenue and Budget

Submitted by night_hunter on March 11, 2009 - 10:35am.

Who are we trying to fool here? If the economy rebounds, then more tax revenue will be received, both because more people are back at work, and because businesses are making a profit. "Projections" are best guesses based on the incomplete information available and historical records - and in my experience does not fall within 20% of reality -good or bad. The budget, on the other hand need not be designed to spend all available revenue, and in fact should provide for savings for emergencies, down turns in the economy like this one, and projects that are so enormously expensive that an increase in cost due to the length of the project is guaranteed.

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