RALEIGH, N.C. (AP) — North Carolina’s state government coffers should remain flush with cash at the end of the fiscal year after projections made three months ago by state officials were adjusted only slightly downward Thursday.
Gov. Roy Cooper’s state budget office and General Assembly staff released an updated forecast after the Department of Revenue received key April 15 individual and corporate income tax payments and returns.
The figures play into how Republican legislators in charge of the General Assembly consider spending, saving or cutting taxes while fashioning a new two-year budget over the next several weeks.
The two government branches project the state’s general fund will take in $33.62 billion for the fiscal year ending June 30, which is $136 million less than the total set in the initial consensus forecast from February.
Still, that updated figure equates to overcollections of $3.11 billion, or 10% above the $30.51 billion in revenues that had been anticipated to come in to carry out the current state budget law enacted last summer.
Thursday’s forecast also slightly raised revenue projections for each of the next two fiscal years through June 30, 2025. February’s forecast expected year-over-year revenues during that time period to be essentially flat.
The House passed a budget last month that would spend $29.8 billion during the next fiscal year. That amount is in keeping with spending limits agreed to by House and Senate GOP leaders in March. The Senate is expected to unveil and vote on its budget proposal next week.
The two chambers will then negotiate a final budget measure to present to Gov. Cooper. The Democratic governor’s budget proposal sought to spend nearly $33 billion next year.
April historically has been the most volatile month for tax collections. But this year’s totals were consistent with the February forecast, which anticipated those collections to be below prior-year totals, according to a forecast summary from the Office of State Budget and Management.
Thursday’s slight pullback in projected state revenues this year is predominantly attributed to lower investment income earned on state government’s operating cash and reserves, General Assembly economist Emma Turner told legislative leaders in an email. The upward revision for revenues for the next two fiscal years comes from an improved outlook for sales tax collections and a higher corporate tax base, she added.
Forecast authors said the economic outlook remains unchanged since February, with expectations of a slowdown during the upcoming biennium and the risk of a recession.
The state general fund collected $33.21 billion during the 2021-22 fiscal year. This year’s state budget was enacted based on expectations of significantly lower revenue. But Thursday’s forecast now estimates revenue will be $416 million higher compared to last year, the state budget office said.