Strong Revenue Forecasts for North Carolina Continue Under Republican Leadership in the General Assembly
Raleigh, N.C. – A joint revenue forecast released Thursday by the legislature’s Fiscal Research Division and the Office of State Budget and Management predicts tax collections will exceed previous estimates by $4.1 billion (17.6%) to support continued budget growth under Republican leadership for North Carolina.
The state’s Republican-led General Assembly reformed its tax code last decade to levy a lower sales, income, and corporate tax rate on the workforce and economy. Balanced budgets, strong savings, and revenue surpluses have maintained unanimous AAA credit ratings for North Carolina.
Currently North Carolina is ranked the #1 Best State for Business by Forbes and Site Selection Magazine, and was Business Facilities’ 2020 State of the Year.
By contrast, following the financial crisis of 2008 after a decade of Democratic leadership, North Carolina was billions of dollars in debt, faced massive budget deficits, and had some of the highest taxes in the Southeast. The result was teacher furloughs, pay reductions for public employees, and big spending cuts.
The consensus forecast released Thursday says current year revenue is well ahead of expectations largely because “business tax collections…are all expected to post robust, positive year-over-year growth.”
General Fund revenue is expected to increase by $873 million and reach $28.5 billion by the end of FY 2022-23, according to the forecast. Personal income taxes are also estimated to finish much better than expected, with positive year-over-year growth.
Economic activity in North Carolina recovered much faster than normally expected coming out of a recession, the report said.
“The state’s tax structure is such that a majority of taxes are collected from middle and upper income households and large businesses,” the report notes.
Sales tax growth is also strong for North Carolina, despite a lower rate charged to taxpayers under Republican leadership.
“Today’s revenue forecast represents promises kept for North Carolina to prepare for economic and natural disasters with a pro-growth tax code and responsible budgets that invest in shared priorities,” Moore said Thursday.“People are paying lower taxes in North Carolina and benefitting from a pro-growth approach to the public and private sector.”“It is essential our state maintain these successful policies and financial flexibility, to not return to days of higher taxes, wasteful spending, and budget deficits that hurt North Carolininians in prior economic crises.”
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