The bottom appears within sight. The latest state financial report notes that we had our first single-digit drop in year-to-year revenues since September 2008. This is good news, in the I've-been-down-so-long-that-it-looks-like-up-to-me sense.

A few highlights noted by the JLBC staff:

The January revenue results broke several long term trends. General Fund revenue collections were $1.44 billion. Excluding one-time proceeds, collections were (2)% less than last January. This was the first single digit year-over- year loss since September 2008.

In addition, January General Fund revenues were $14.2 million above the forecast, which marks the first time since March 2007 that revenue collections exceeded

the projection.

Beginning with this February report, we are comparing actual revenue collections to the Baseline consensus forecast published last month. The Baseline forecasts a revenue decline of (10.8)%, compared to 0.9% growth in the original FY 2010 budget. Since the revised forecast is $(880) million less than the original budget for the year, it will be easier to meet or exceed the forecast going forward.

January 2010 General Fund spending was $972.7 million. January expenditures were higher than the prior year due to the late payment of the Universities December allocation. Year-to-date spending is ($176) million less than the prior year.

In January, state revenues outpaced the rate of spending due primarily to one-time transfers and sale/lease-back proceeds. General Fund revenues exceeded expenditures by $468
million for the month. Fiscal year-to-date, however, General Fund revenues are $4.80 billion compared to spending of $6.21 billion, for a 6-month deficit of $(1.41) billion.

Daily borrowing has increased since the end of January when a one-time influx from the sale of state buildings temporarily eliminated the need for borrowing. Part of the increase in borrowing is due to maintaining a $300 million balance with the servicing bank.

The state pays its bills out of the operating fund balance, which consists of General Fund and certain dedicated funds. To cover last year’s $(480) million shortfall and this year’s $(1.4) billion shortfall in the General Fund, the state has already effectively borrowed all of the state’s approximately $1.6 billion in dedicated funds in the operating balance. Having exhausted that source, the state literally borrowed as much as $572 million in February by issuing Treasurer Warrant Notes (TWNs). The average daily borrowing was $377 million. Year to date, the highest daily borrowing was $905 million.

Read the report youself here.

We'll take a closer look later.