(RALEIGH) -- State tax collections are $150 million ahead of projections after the first quarter of the fiscal year.  That means state revenue is up 3.4 percent, despite the state’s high unemployment rate.

Legislative fiscal economist Dr. Barry Boardman said the housing recession is still a major drag on economic growth. "Housing is what brought us into this recession and it's going to take a very long time for housing to unwind, as we are seeing," said Boardman.

Boardman's forecast predicts conditions will improve, although growth will be slower than originally expected. "The bottom line is I think we're stuck with some high unemployment and weak consumer demand and those are going to be with us the rest of the fiscal year creating some risk."

Boardman added that the surplus may not last if the unemployment rate remains above 10 percent.