Lagging revenue doesn't worry top lawmakers

Posted January 15, 2015

Senate President Pro Tem Phil Berger, left, and House Speaker Tim Moore answer questions during a Jan. 14, 2015, news conference about the legislative agenda for the Republican majority in the General Assembly.

— The newly installed leaders of the General Assembly said this week they are not worried about a revenue report showing state tax collections are lagging roughly $200 million behind projections for the first half of the state's fiscal year. 

"Collections on wage and salary income continue to lag behind forecast expectations," says the report authored by Barry Boardman, the legislature's top economist. "Sales and Corporate Income tax collections have offset some of the weakness in Personal Income tax collections."

That picture is consistent with national figures that have shown the economy recovering on several fronts, but wage growth lagging despite a dipping unemployment rate.

While the $200 million gap between projected and actual income tax collections isn't exactly good news, top lawmakers sworn into their leadership posts this week say it's nothing to worry about – at least not yet. 

"What we're talking about, at this point, some folks think is a timing issue," Senate President Pro Tem Phil Berger said Wednesday. "You're talking about maybe $200 million in the context of a $20 billion budget. When we first got here, we were looking at a shortfall of $2.5 billion. This is not something that is, from my perspective, and I would say from the perspective of most of our members, something we consider to be a major concern...something we would consider an indication there is a problem somewhere." 

The timing issue that Berger, R-Rockingham, is referring to has to do with when personal income taxes are typically collected. Sales taxes see a boost during the December holiday shopping season, and corporate income taxes tend to come in quarterly chunks throughout the year. Individual taxpayers, however, tend to settle up with the tax man on April 15.

Boardman noted in his report that projections were complicated by the 2013 tax bill, much of which took effect in 2014.

Pushed as to what happens if the $200 million gap is indicative of some broader problem, Berger said he didn't want to deal in hypotheticals. 

"If we end up with a situation where we are short of the projections, we'll manage," he said, "and we'll manage in a way that will continue to move North Carolina forward."

Lower-than-projected revenues mean that lawmakers will have less money to fund new or expanded items in the budget. Several big-ticket items, such as continuing the push to raise teacher salaries, boosting court funding and paying for Gov. Pat McCrory's proposed traffic infrastructure bond, could go begging. 

Newly elected House Speaker Tim Moore said that lawmakers may be able to find more money for courts by raising user fees, perhaps on high-dollar civil cases. 

But neither Moore, R-Cleveland, nor Berger seem eager to take on another round of broad-based tax reform. 

Boardman's reports suggests that state tax revenue may be on their way to rebounding, but lawmakers may have to be patient. 

"Wages may remain stagnant until the economy nears full-employment and the unemployment rate drops to five percent," the report said.

North Carolina's seasonally adjusted unemployment rate for November was 5.8 percent.


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  • Chris Holder Jan 15, 2015
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  • stymieindurham Jan 15, 2015

    Of course they're not worried, they're in their power seats and are getting paid.
    It will simply be ' everyone else's ' problem in the end.
    I didn't see that anywhere in the article. Did I miss it???

  • heelhawk Jan 15, 2015

    why should they worry. They can always implement more austerity measures to more heavily burden the poor and middle classes. Perhaps what we really need to solve the lack of revenue is another tax cut for corporations and the wealthy.

  • davidgnews Jan 15, 2015

    Of course they're not worried, they're in their power seats and are getting paid.

    It will simply be ' everyone else's ' problem in the end.

  • TheCape Jan 15, 2015

    So long as their response is not to raise taxes on those of us already paying, it should be ok.

    Just rebudget and work with what you have guys.