Yesterday in his comments at the Budget & Tax Center’s legislative briefing in Fayetteville, Senator Rand said that the he has been told by legislative fiscal staff that state tax revenues are behind projections by $90 million through the end of October. In the grand scheme of things that is not too much money. What is troubling about this is that the state’s revenue forecast assumes that the worst months would be at the beginning of the fiscal year and after that things would begin to head slowly upward. Moreover, the budget for fiscal year 2010-11 assumes that revenues will grow at a rate of 2.8%. If revenues continue to fall behind the forecast the Governor will be forced to take painful mid-year actions to address this year’s gap and the General Assembly will be forced to make another round of budget cuts sooner rather than later.
On a related note, the Center on Budget and Policy Priorities, just released a new report that looks at how states around the country are faring. It turns out they are not faring well at all and state budget gaps are a major drag on the fragile economic recovery. In addition to assessing the fiscal state of the states, CBPP’s report looks at why the federal government should consider another round of aid to state and local governments to mitigate the drag that state budget gaps are having on the economy and to prevent more harmful budget cuts.