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.
Comments
Re: State collections down 6.1 percent
December 22, 2008 - 10:40pm — isittrueDoes the 6.1% include falling revenues for the NCDOT - that is, the revenue NCDOT receives from the gas tax, car sales, and regisrations? If not, how much is that revenue stream down?
Re: State revenue down 6.1 percent
December 22, 2008 - 4:30pm — bniolet (author)It means tax collections are down 6.1 percent from expectations for this year. Sorry for the lack of clarity. — BLN
Re: State revenue down 6.1 percent
December 22, 2008 - 4:17pm — dmarpsThe headline and trhe story are not clear on what "State revenue down 6.1 percent" means. Are revenues down 6.1 per cent from last year or 6.1 per cent below estimates for this year?
Saying "down 6.1 per cent" implies down from the past year. Revenues could be down 6.1 per cent from the state's estimates or plans and actually be above last years'.
Of course saying "Down 6.1 per cent" implies down from the past; if that's not the case, you could well be making the situation sound worse than it is, which the state politicians prefer, of course. That enables them to ask for even more tax and fee increases.
From many years in business management, I can tell you that a six per cent reduction of costs from one year to the next can be done, especially after years of increasing expenditures. There will be weeping and wailing, but is is achievable if management wants to do it.
Re: State revenue down 6.1 percent
December 22, 2008 - 3:32pm — profbamDepartments of the State of NC have been asked to draw up budgets for next year that include a 10% permanent cut. Most have operating expenses that are 2% - 4% of total budget, the rest is salaries and benefits. The ONLY way to make 10% cuts is to terminate currently filled positions. Those folks will stop paying taxes, reduce spending at stores, collect unemployment and Medicaid, and otherwise increase the demands on the State's social network.
The only alternative is rotating furloughs in order to save in salaries the necessary amount of money. State personnel are demoralized as is. It WILL get worse.
Re: State revenue down 6.1 percent
December 22, 2008 - 1:57pm — informed"if it doesn't get worse"
There's no question it will get worse, what is unknown is how much worse, since no one is using the word "mild" in this downturn.
Re: State revenue down 6.1 percent
December 22, 2008 - 12:20pm — chilledThat's much better than other states...we can handle 6%,if it doesn't get worse...