South By North Strategies, Ltd.

A new brief from the North Carolina Budget & Tax Center finds that even the most extreme budget reductions currently under consideration will require North Carolina to raise additional revenue to balance its fiscal year 2012 budget. From the report:

To close the gap between current service levels and anticipated revenues, Governor Perdue requested plans to reduce state funding for public schools, community colleges,and the UNC system by 5 and 10 percent, with all other state agencies asked to prepare an additional plan cutting state funding by 15 percent. The worst-case scenarios from all agencies, including agencies that provided budget-cut plans and those that did not, account for less than $2.6 billion of the total shortfall of $3.7 billion.
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These estimates presume that revenues will grow at the historical rate of 5 percent—nearly twice the rate of growth in the current year—and that lawmakers will exempt North Carolina from federal tax law changes that are projected to reduce state revenues by $423million in the next budget year. If continued weakness in the economy reduces revenue growth to the same rate as this year and lawmakers choose not to exempt North Carolina from expected federal tax law changes, next year’s revenue shortfall would climb to $4.4 billion.