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@NCCapitol

State revenue forecast now $271M short

Posted February 10, 2015

— A forecast released late Tuesday by the legislature's leading economist predicts the state's revenues will fall $271 million short of its $21 billion budget for the 2014-15 fiscal year, with a gain of less than 4 percent expected for the coming 2015-16 fiscal year as well. 

The report is slated to be presented to a joint meeting of the House and the Senate budget committees Thursday morning.

In a memo to legislators, Fiscal Research Division Chief Barry Boardman says revenues in the current fiscal year have grown by only 2.9 percent, rather than the 4 percent growth predicted in May 2014.

The increase was driven by state sales tax collections, which have grown as the economy has recovered. But personal income tax projections are now expected to fall 3.8 percent short of projections.

In his memo, Boardman says the 1.3 percent difference in overall projected revenue – he points out it is smaller than the median error since 1987 – is largely due to "slower than expected wage growth."

Previously publicized projections of the expected shortfall this year were around $200 million, although sources at various state agencies told WRAL News they were instructed by the governor's budget office to plan for a $300 million shortfall instead. 

Boardman also says in his memo that his predictions are based on an assumption of higher state income tax revenue in April due to changes made in the 2013 tax code rewrite. However, he also says corporate income taxes are likely to bring in 5.7 percent less next fiscal year due to 1 percent drop in the corporate income tax rate scheduled to take effect in 2015.

11 Comments

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  • Matt Price Feb 12, 2015
    user avatar

    It is funny that libs think this is a problem. After all, the same was happening under the Chicken Lady Perdue and they didn't even cluck once on that - but now it is a big dramatic issue now that a Republican is in office.

  • Bob Cooke Feb 11, 2015
    user avatar

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    Jesus said we should take care of the poor and unfortunate. He didn't say we should run it through the government first. Jesus WOULD be proud of american conservatives when it comes to charity.

  • Sean Creasy Feb 11, 2015
    user avatar

    The increase was driven by state sales tax collections, which have grown as the economy has recovered. But personal income tax projections are now expected to fall 3.8 percent short of projections
    Read more at http://www.wral.com/state-revenue-forecast-now-271m-short/14438216/#iLZolHjRAoYVtBDy.99.......... How is that?? For over 30 years I have paid taxes in NC and every year I usually get around $100 back, except this year.. This year I only got $7. Now with that much of a change even though my filing status hasn't changed over the last 20 years, how can they possibly be short of money? Something sounds fishy to me especially in light of the upcoming DECREASE on the gas tax fixing to be voted on....

  • Tim Pearce Feb 11, 2015
    user avatar

    How about trimming some of the "" STATES WANTS AND EXPECTATIONS "" !!!

  • Tom Boswell Feb 11, 2015
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    But Melanie it is!!! When McCrory took office we had an unemployment rate of 9.5% which ranked the country's 47th highest. In less than two years, we are now ranked 23th with a rate of 5.5%. This decrease of 4% by far represents the largest decrease in the country. According to the Tax Foundations web site our overall state tax burden in one year went from the 6th highest in the country to the 34th highest. They stated in their long history it is the largest difference in one year. It keeps getting better. CNN/Money just released the states GDP figures and North Carolina's was highest in the south, 6th highest east of the Mississippi and 16th highest overall. According to the usgovernmentspending.com’s web site, North Carolina’s real state growth is 17th highest in the nation, and second highest east of the Mississippi. Same source our state and local debt as a percentage of GDP is the 7th lowest in the country.

  • Melanie Lane Feb 11, 2015
    user avatar

    but wait.. the media reported the smiling happy governor everywhere saying how well NC is doing.. seems we need to be able to take more food out of the mouths of hungry people to fix this because no way we're going to take it from those who can actually afford it. We live in a reverse robin hood world.. take from the poor and give to the rich but since there will never be enough to take from those who have nothing to give this will continue to spiral just as it has for the last 35 years - Jesus would be so proud of american conservatives

  • Kevin Oliver Feb 11, 2015
    user avatar

    Flat tax. Great idea legislature. Keep up the great "leadership." Oh, and about that 2 cent drop in the state gas tax you proposed yesterday? Yeah...

  • Tom Boswell Feb 11, 2015
    user avatar

    Those that comment negatively about this please re-post your comment you made in 2012 when the Democrats two year budget ending in June of 2012 created a 2.5 billion dollar deficit. At the time it was the country's fifth highest.

  • Carl Keehn Feb 11, 2015
    user avatar

    Can't blame it on me. My taxes went up, based on last year.

  • Michael Chappell Feb 11, 2015
    user avatar

    I guess tax refunds will be delayed!

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