The Forecast: Sunny With a 100% Chance of Surplus
The latest Consensus Revenue Forecast came out last week, projecting that an extra $3.25 billion will flow into the state’s coffers by June 30, the end of the 2023 fiscal year. This represents a one-time 10.7% increase in revenue over the prior fiscal year, and roughly equal to the 10.8% increase from the year before that.
“The surplus projected in today’s consensus revenue forecast demonstrates the economic strength of our state,” commented House Speaker Tim Moore. He went on to highlight the steady influx of families and businesses to North Carolina, which has seen nearly a million people move to the Tar Heel state in the last decade alone.
Senate President Pro-Tem Phil Berger echoed Moore’s remarks, saying the “consensus revenue forecast confirms that North Carolina’s tax policies are fueling economic growth. The surplus is a significant increase over the current fiscal year’s budget.”
Since 2013, the conservative majority in the General Assembly has lowered individual income taxes from a high of 7.75% in 2010 to 4.99% this year. The state’s corporate income tax rate went from a high of 6.9% in 2010 to the current 2.5% (the lowest in the country among states that collect corporate income taxes) and North Carolina is slated to eliminate it entirely by 2030.
North Carolina operates on a biennial budget, meaning that it covers two fiscal years (adjustments are made by the legislature in the second year, during the so-called short session); the current year’s budget is nearly $28 billion.
Revenue forecasts (and sometimes subsequent revisions to those forecasts) are estimates of the amount of revenue that will be available for the budget. These figures are produced several times a year by the state’s Consensus Forecasting Group, which is comprised of economists from both the executive branch (the Office of State Management and Budget) and the General Assembly’s non-partisan Fiscal Research Division.
In addition to celebrating the $3.25 billion surplus, Moore and Berger both offered fiscal prudence. “While this year’s surplus is welcomed news, we need to be cautious as we prepare the budget,” concluded Berger. “We must continue to prioritize responsible spending, addressing our state’s workforce needs, and providing additional tax relief to our citizens.”
“I am confident that as we continue to address some of the state’s most pressing needs, we will continue doing so in a fiscally responsible way that leads to even more growth for North Carolina,” added Moore. “This is the approach we will take as we consider our budget priorities of targeted raises for law enforcement and other key personnel, greater investments in infrastructure, and workforce development initiatives.”