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April 09, 2010

North Carolina budget outlook

The General Assembly will soon be returning to Raleigh to deal with the state budget for the next fiscal year. What's the latest reading on the budget? Will decisions be easier or harder?

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Well, they will still be challenging. ... Unfortunately revenue to the state government is running still below expectations. This is primarily due to soft sales tax revenues and soft individual income tax revenues that are coming in low.

"This, of course, is a result of the unemployment situation in this state. The situation actually ... would be a lot worse if not for a special collection that the revenue people were able to do of unpaid taxes of over $200 million.

"However, there is still hope: The most important month in terms of revenue for the state is April, obviously because of income tax filings. And what's important about that is because it's very hard to estimate, for example, income from investments and capital gains which result when people sell stock.

"So that will become much clearer after we get the income tax filings in April. That wild-card, of course, is going to be investment income. So right now it's going to be a challenging situation -- how challenging will depend on what April's numbers look like."

Posted by deeshore at April 9, 2010 09:17 AM