Last week legislators learned from the General Assembly’s chief economist that the state budget deficit has swelled by another $1.5 billion to an alarming $4.6 billion.  The new revenue shortfall estimates are based on revised projections that follow the April 15 tax filing deadline.  The April tax numbers showed a decrease in revenue of 40 percent over last year – twice the decline that occurred during the last recession.  According to Barry Boardman, economist, Fiscal Research Division, "The state has never experienced the types of shifts in revenue that we're experiencing now." (Associated Press, 5/6/09)

The new shortfall projections will make the job of crafting their version of a state budget even harder for members of the state House, who have proposals submitted earlier by both Governor Bev Perdue and the state Senate to consider.  To achieve a balanced state budget as required by the North Carolina Constitution, lawmakers will either have to produce additional cuts or identify ways to raise additional revenue beyond the $550 million in new revenue that would be generated by the Senate’s controversial tax reform proposal.  (Both budget proposals submitted by Governor Perdue and the Senate earlier used more than $1 billion in federal stimulus dollars to help address the budget gap that was $1.5 billion smaller than it is now.)

Even with the revenue situation as dire as it is, insiders are predicting that House budget writers will produce their version of a spending plan for the next two year within the next week or two.  Once the House passes its proposed budget, a joint conference committee made up of lawmakers from both the state House and Senate will meet to iron out their difference and produce a compromise budget for North Carolina for the next two years (July 1, 2009 – June 30, 2011).