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The Joint Legislative Commission on Government Operations is just about as much fun as the name implies. Basically, it's the legislature's way of keeping tabs on things even when the General Assembly is not in session.

Today the members got some reports that may make them wonder why they bothered running for re-election.

In particular, Economist Barry Boardman of the Fiscal Research Division and Charles Perusse, Director of the Office of State Management and Budget, dropped these little nuggets:

• * The government is managing what looks to be a $1.2 billion hole in the budget, give or take $400 million or so. If you want a quick overview of what is going on with the economy, check out this presentation. I would point especially to page 15, where collections of real estate transfer taxes fall off the edge of the Earth.

• * That shortfall doesn't include what's likely to be a needed $300 million fix to the state health pan.

• * As a result, the governor has upped the ante on budget cuts. Agencies originally asked for 2 percent trims are now being asked for upwards of 5 percent cuts.

According to Perusse, savings will come from several places. The Medicaid program is not sucking up as much money as was budgeted, due in part to lower costs in the mental health programs. He warned, however, that could and most likely will change.

The state is putting off some pay-as-you-go construction projects, although bond-funded projects are still on track. Agencies that are being asked for 5 percent cuts in several areas, including most general government functions, Environment and Natural Resources and the Commerce Department. DJJDP, the juvenile justice agency with in DOJ, is also being asked for 5 percent. There is some flexibility, Perusse said, for "hardship agencies" that would not be able to make cuts without cutting critical services.

Still, to completely balance out the $1.2 billion hole, if it gets that big, the governor's staff relies on $287 million from the state's rainy day fund. That wouldn't wipe out the fund, but the idea didn't sit well with some legislators.

Rep. Mickey Michaux of Durham, for example, said that the rainy day money might be better spent on the health plan's problems rather than plugging holes in revenues.

The good news is that officials are aware of the problem and are making cuts and otherwise addressing the problems so the state's books will remain in the black. That means Bev Perdue won't have a big old deficit to manage when she walks into office.

"He (Gov. Mike Easley) was adamant in his direction to me that he wanted a management plan in place that would allow the next government to inherit a balanced budget," Perusse told the committee today. Also in the relatively good news column is the fact North Carolina is not as bad off as some other states where cuts have been more immediate and Draconian.

The bad news, of course, is constructing the next state budget is going to be absolutely no fun at all. Boardman projected that the downturn in the economy (which creates a downturn in tax collections) will last well into 2010. That means right as demand for government services (unemployment benefits, Medicaid, education, etc...) goes up, the state is going to have less money to put into all that stuff.