North Carolina government revenues keep exceeding economists’ projections, despite broader worries about an economic downturn.
Gov. Roy Cooper’s state budget office and the Legislature’s Fiscal Research Division agreed that revenues are $1.2 billion above the target through Nov. 30, the first five months of the fiscal year, officials said this week. That’s about 10% more than expected, state budget Director Kristin Walker said Thursday. The Fiscal Research Division’s confirmation originated from the House’s senior budget-writers.
All kinds of tax collections are up, the Office of State Budget and Management said, including individual and corporate income taxes, sales taxes and taxes on investments. This revenue increase arrived before the holiday shopping season, which can affect sales tax levels.
The executive and legislative branch officials cautioned that the risk to the forecast is backloaded to the second half of the fiscal year, particularly when income tax payments arrive in mid-April. But the $1.2 billion overage remains large, even when compared to an annualized approved state budget of nearly $28 billion.
Unexpected revenues provide more flexibility and options to budget-writers as they draw up spending plans for things such as schools and employee pay, and consider tax rate changes. The General Assembly convenes its two-year session Jan. 11. Cooper will propose a biennial budget in early 2023.
The good news on collections follows the previous fiscal year in which the state ultimately received $4.8 billion more than it projected for the 12 months ending June 30, according to a state budget document.
The current budget that the General Assembly approved and Cooper signed parked billions of dollars either in reserve as a protection against inflation and a potential recession, or toward one-time needs such as construction and local water and wastewater projects.