Gov. Bev Perdue announced next year's budget hole is $1billion smaller than previously projected, just as legislators received key information on how much they'll have to spend over the next two years.
Perdue said next year's budget shortfall has shrunk from a projected $3.7 billion to $2.7billion though a combination of increased revenue and control of health care and other costs.
Perdue's announcement - made via YouTube - came a few hours before the House gave preliminary approval to a savings bill she is opposing because it takes unspent money from economic development funds to help pay next year's bills.
Republican legislators said they appreciated Perdue's efforts, but that there is much more work to do. They remain determined to pass a bill Perdue doesn't want.
Even if the hole is $1 billion smaller, said Senate leader Phil Berger, that still leaves a substantial budget gap.
"We need to do everything we can do proactively to get savings," he said.
Key legislators have known since last week that economists expect revenue to be up next year. On Wednesday, that information was included in a forecast delivered to lawmakers. The forecast was prepared by the legislative staff and the Office of State Budget and Management.
The state will collect $156.4 million more in taxes than originally expected this year. But revenues will drop about $311 million next year - to about $18.8 billion - because temporary tax increases will expire. Revenues would perk up in the second year of the two-year budget cycle, reaching nearly $19.9 billion in 2013. The projections are based on increases in sales, corporate, and franchise tax collections.
Legislators questioned whether the projections were too rosy. Some said they won't count on having all that money.
"They could be a little optimistic," said Sen. Neal Hunt, a chief budget writer. "We may need to be a little conservative on the appropriations side just in case," he said.
Rep. Harold Brubaker, a chief budget writer on the House side, said he didn't completely buy projections that showed state revenue growing at more than 4 percent.
"We will have to be cautious in case those revenue projections don't pan out," he said.
Perdue's surprise announcement was based on data from the Office of State Budget and Management, and comes just days before she and the legislature start hard budget crunching. She goes before the legislature Monday night to deliver her State of the State Address, and is scheduled to deliver her budget recommendations in the middle of next week.
Perdue made the announcement in a YouTube video, rather than in a setting that would have allowed questions from reporters. Nor did Perdue mention the savings at a news conference Tuesday.
Christine Mackey, the governor's spokeswoman, said Perdue decided to announce it to the public rather than to reporters.
"I think the governor tried to share the news and wanted to get it out to everybody at the same time," Mackey said.
Mackey said Wednesday was "the first time she had the total budget picture and she wanted to share the good news before we got to next week."
Staff writer Rob Christensen contributed
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