States Enjoy Steady Rise in Revenue

Schools Are Among Chief Beneficiaries

With his state flush with cash, Gov. Michael F. Easley of North Carolina can have the best of both worlds.

Sitting on a $1 billion surplus in an operating budget of $17.4 billion, the second-term Democrat last week proposed a politically popular 13 percent spending increase for K-12 education, while also asking the legislature to block scheduled tax hikes.

Such surpluses are giving policymakers around the country the chance to do the same in their own states. According to a recent report, fiscal 2006 revenue estimates are exceeding original targets in 44 states. But while schools will share in the spoils in North Carolina and many other states, some lawmakers are instead spending unexpected revenue elsewhere or are saving it...