Easley Says Tax Hike May Be Unavoidable

That is the word from Gov. Mike Easley, who says the state's finances are in worse shape than previously thought.

Easley says between $700 and $800 million in taxes would put the state in better shape.

Easley says new projections show that tax collections for the budget year that started this month will be $180 million lower than predicted in May.

He did not pinpoint how he would propose raising taxes during his interview with The Associated Press and

The News And Observer

of Raleigh.

Legislative leaders have been informed about the state's financial condition, and a meeting is planned for Monday.

The governor says the state's reserves have been hit hard by recovery expenses from hurricanes Fran and Floyd, court-ordered givebacks to taxpayers, and Medicaid costs $400 million above expectations.

He says the nationwide economic slowdown has hit North Carolina harder and faster than almost any other state and led to falling tax collections.

Easley says about $1.8 billion in tax cuts during the 1990s were a mistake that helped throw the state's books out of whack.