State revenue down 5 percent

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.

Some revenue details after the jump.

• Personal income tax withholding on wages and salaries grew 3% in October. The weakest area for withholding taxes are monthly and quarterly withholding payments (8% decline). One reason is that the smaller businesses, who pay on a monthly or quarterly schedule, are cutting back on their payrolls.

• Sales tax collections reflect how this economic downturn is having a big effect on consumers. Baseline state & local collections are down from last year by nearly 3%.

• Two taxes paid by businesses, Corporate and Franchise taxes, are down 7.5% for the year. The economy’s impact on corporate income tax collections will not be fully understood until April 15.