WRAL reported yesterday about updated revenue projections for the state budget. According to the article, the picture is still pretty dim, but not as bad is worried:
The state budget won’t be in such bad shape in the coming year, after all, a fiscal analyst told lawmakers Monday.
The latest projections call for a budget deficit of $787.9 million for the 2010-11 fiscal year, which begins in July, Barry Boardman, an analyst in the nonpartisan Fiscal Research Division of the General Assembly, wrote in a memo to the heads of the House and Senate budget and appropriations committees.
State officials previously estimated a deficit of $700 million to $1.2 billion for the upcoming year, on the heels of the record $4.5 billion shortfall last year.
Because personal income tax and sales tax collections remain below forecasts, Boardman said, the revenue shortfall will likely be $702.9 million in 2010-11. The remaining $85 million of the projected deficit is tied to the expiration of the federal estate tax in January.
Unfortunately, this report only looks at the revenue side of the equation. On the expenditures side, early projections are saying Medicaid expenses will exceed budgeted appropriations for the coming fiscal year by roughly $500 million. Combine that with revenue coming in $788 million below projections, and lawmakers are staring at a $1.3 billion deficit. So even after all of the reductions in spending approved for 2010-11 in last year’s biennial budget bill, budget writers will still be facing a hole of $1.3 billion. And that is already counting the federal stimulus dollars plugged into the state budget, as well as the more than $1 billion in additional revenue from last year’s tax hike.
So how will our state leaders fill the $1.3 billion budget gap this year? There’s no more federal stimulus dollars available; and in an election year another round of tax increases are likely off the table.