N.C. says red ink doesn't mean state's broke

April 17, 2009 

North Carolina has plenty of money in the bank, despite the disturbing numbers in a report this week from State Controller David McCoy.

McCoy said the state has never had less than $500 million in the bank on any given day. On Wednesday, the figure was about $750 million.

"We're not broke by any stretch of the imagination," McCoy said.

His report Wednesday, however, said the state's General Fund had a balance of negative $1.3 billion at the end of March. That figure represents money owed to individuals for tax refunds, to localities for tax revenue due back to them and money owed to the state itself.

Gov. Beverly Perdue has seized money in March and April from a variety of state accounts to pay the bills.

McCoy likened that step to moving money from a savings account to a checking account in order to make payments.

The numbers all represent a cash-flow management made more difficult by the recession. Tax refunds have been delayed, and the localities' money is not yet due, but those figures are still reflected in what the General Fund owed March 31.

So it shows a negative figure. McCoy said tax revenue flowing in over the next few days is expected to bring the General Fund figure back into balance.

A budget slowdown

The state Senate was in a rush to adopt its draft of the state budget.

Now the document is on hold while the House waits for updated tax revenue numbers. The numbers will be based on what the state Revenue Department saw by the April 15 income tax filing deadline.

Rep. Mickey Michaux, the chief House budget writer said the numbers should be available by Monday. It's only then, he said, that the House can start to put a budget together.

"We're not going to do anything until we get the numbers," said Michaux, a Durham Democrat.

Income tax returns accounted for $11.4 billion or 54 percent of state revenue in the current budget.

The recession has made predicting revenue difficult for analysts. Michaux said the Senate's assumptions about revenue wouldn't likely hold up.

"In my book, they didn't have to rush," Michaux said last week.

The state must have a balanced budget. That means lawmakers can plan to spend only what they think they will collect.

Michaux said he fears those numbers could push the deficit above $4 billion. The Senate's budget, like Perdue's, assumed a $3 billion deficit.

By staff writers Mark Johnson, Benjamin Niolet and Ryan Teague Beckwith. mjohnson@charlotteobserver.com or919-829-4774

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