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~CElYr_~ ,,4A~ 2 2 19~1 STATE OF NORTH CAROLINA OFFICE OF THE GOVERNOR RALEIGH JAMES G. MARTIN Na~Ch 1991 Des* Local Gover~ent Official: As you are aware, the state's current ye~ budget is experiencing subst~tfal revenue collection shortfall.' I~ early J~u~ry, 1991, ~y of State BudEet ~d ~Eement estimated that ~e shortfall fn revenue collections would be approximately S360 ~fllfon. After review of ~he J~uary ~d Feb~nry revenue collections, we now ~fcfpste ~e shortfall to exceed ~e ~60 ~illion. ~fore my staff c~ m~e a final estimate we must have collected ~d ~alyzed ~e April revenne collections. However. as 6overnor. ~d as the one res~nsible ~der the State's Constitution to maintain bsl~ced bndget. ~ sus~ pre, are for ~he worst c~e scenario. ~erefore. have t~en several steps to ~age a revenue shortfall for this fiscal year as To date. we have directed state agencies ~d institutions to r~d~ce authorized ~pend~n~ by $1~.9 million. ~is represents 1.8% of operating b~dgets. ~d ~s in addition to ~e ~.~% red~ctions made by ~e 1~89 ~J~e. 1990) Session of ~e General Assembly. Approximately ~1~ millien o~ state constr~tion projects have b~ f~zen ~d th~ state's ~rainy day" f~ of ~1~1 mill~on is ~so plied to be used to ba!~ce this ye~s bndget. ~n addition. $~9.0 million of s~ate f~ds no~lly ~r~sferred to ~e State's Teachers~ ~ State ~ployees~ ~e~irement System ~d ~ million of special ~d~o~er f~ds are being held. Finally. let me s~ to ~ ~tem in which yo~ have special interest. Local gover~ents are scheduled to receive in ~arch $~18.7 m~llton of state npp~prtattons. ~ese f~ds include the "reimbursement tr~sfer" (previous inv~tory t~ ~d int~gible t~ on b~ dens,ts collected by local governors) as well ~ ~e ~verage, fr~ise ~d int~gible t~es (~ 2377) now tr~sferred to ~over~ents th~u~ ~ appropriation. I have d~rected ~e Office of State Budget ~4 M~a~em~t to wit~ol5 ~e S29.~ million of ~e Mar~ troffer ~t~l J~e, 1991; th~s regresents 6.2% of the total f~ds app~priated (~76.7 mill~on) to local ~ve~ents, ~e s~e parentage by whf~ o~e~ app~pr~st~ons have ~en reduced. ~ese f~ds w~ll ~ held in a depository accost ~til then, at whf~ time a 4ecfsfon will ~ made ns to ~e necessity to ~tly wit~old these f~ds ~n order to mainta~ a bal~ced budget fo~ ~9~0-~1 fiscal year. If ~e f~nal shortf~l does not exceed S520 m~ll~on. ~e Office of State BudEet ~d M~age=~t will be directed to relate the S2~.~ ~illion to local ~ove~ents in J~e. I