Uncategorized

Putting the Mid-Year “Surplus” in State Revenues in Context

Governor Perdue is rightly touting the good news that  state revenue collections are running about $150 million above the $9.4 billion target as of the end of December.  If state collections continue the rest of the year on target, the additional $150 million surplus would be just enough to cover the state’s projected Medicaid shortfall through the end of the fiscal year.

It’s important, however, to put this small mid-year surplus* in the context of the substantial hole revenues must climb out of to reach pre-recession levels.  As the chart below shows, even if North Carolina ends each of the next two years with a $150 million revenue surplus, revenue collections will still be far below the average levels of the two decades prior to the recent recession.

To dig out of the revenue hole resulting from the economic downturn — exacerbated by recent state tax cuts — would require a revenue surplus of nearly $2.5 billion at the end of the current fiscal year and $2.9 billion next year.

 

 

*Technically, above-target collections do not qualify as a true revenue surplus.  A true revenue surplus refers only to above-target revenue collections at the end of the fiscal year.  Furthermore, as the General Assembly’s staff economist, Barry Boardman, has noted, there is still a lot of uncertainty about revenue collections in the second half of the fiscal year.

 

Check Also

Some of Obama Administration’s Proposed Tax Changes Lay Groundwork for Federal, State Reform

This blog post is one in a series ...

Top Stories from NCPW

  • News
  • Commentary

Having devastated the southeast coast of North Carolina, Hurricane Florence is now a tropical depres [...]

The U.S. Commission on Civil Rights has finally released its report and recommendations on minority [...]

Thousands of animal waste lagoons, hazardous waste sites and other repositories of toxic material li [...]

When the North Carolina Courts Commission meets Friday, it will begin to take a look at an issue mak [...]

On Sunday, Governor Roy Cooper declared that affordable housing would be a key focus in the recovery [...]

The post A disastrous idea for storm-ravaged North Carolina appeared first on NC Policy Watch. [...]

History has a habit of turning the tables on us. Economic strengths can become liabilities, and forc [...]

Best-case scenario: Robert Higdon and U.S. Immigrations and Customs Enforcement owe North Carolina a [...]