State revenue ahead of projections

RALEIGH -- The state is pulling in more revenue than lawmakers once expected, though the surplus is smaller than in previous ears.

Economic analysts for the state legislature now estimate that lawmakers will have a budget surplus of about $150 million for the fiscal year that begins July 1.

Last month, the analysts' estimated the surplus would be as low as $15 million, because economists feared the slowing economy would cause tax collections to fall.

But the report released today indicates that April's income tax collections exceeded expectations. That gives lawmakers more room to breathe as they fashion a state budget that is expected to reach $21 billion.

"April revenues came in ahead of target and year-to-date collections are now $90 million ahead of forecast," the analysts said in the report.

The housing recession, rising energy prices and the free-falling financial sector are the main drains on the state and national economy, the report said.

"They are taking a toll on consumer spending," the analysts wrote. "It will be well into 2009 until the effects of these shocks have dissipated."

Barry Boardman, an economist on the legislative staff, said conservative estimates for economic growth have helped keep North Carolina from ending up with a budget deficit for this year.

The report indicates that fiscal staffers have revised their economic growth expectations further downward for the 2008-09 fiscal year, from 4.7 percent to 3.5 percent.

In the past two years, budget surpluses were as high as $2 billion.