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North Carolina’s revenue forecast signals meager growth and murky economic outlook
Posted By Tazra Mitchell On February 21, 2013 @ 9:48 am In NC Budget and Tax Center | Comments Disabled
Earlier this month, North Carolina legislators began the months-long process of developing the two-year state budget that covers July 1, 2013 through June 30, 2015. To kick-off this endeavor, non-partisan staffers have been providing members with an overview of current fiscal conditions as well as past legislative budget actions. Perhaps the most important presentation to date centered on the revenue forecast , which sets the stage for legislators to begin building the next state budget.
Projections from the non-partisan Fiscal Research Division indicate that General Fund revenue collections are on target as of the end of December for FY2012-13. North Carolina’s economy has made improvements over the last fiscal year but continues to lag behind the nation across several economic indicators. And although the state does not face an imminent budget crisis—largely due to a tremendously diminished baseline—the forecast implies that we are not completely out of the woods.
The forecast has been downgraded since the projections were last released in May and remains tenuous for the reasons below.
While some are touting bright news in the state’s revenue picture because revenue collections are running about $106 million  above the $9.8 billion target through the end of December, it is important to put this figure in context. This represents just .53 percent of the state’s annual budget, even at a vastly diminished baseline compared to pre-recession levels. And even with a $106 million revenue surplus at the end of the fiscal year, revenue collections as a share of state personal income would still be far below the 40-year average.
Tax reform has the potential to significantly alter state revenue immediately and moving forward—especially if legislators’ efforts to eliminate entire revenue sources are successful. So while revenues are not projected to collapse in the near term like they did during the Great Recession, there remain lingering questions about the state’s available revenue this year and beyond. Certainly, tax reform will make a significant difference in this year’s budget process as well as the possibility of more robust revenue forecasts in the future.
Article printed from The Progressive Pulse: http://pulse.ncpolicywatch.org
URL to article: http://pulse.ncpolicywatch.org/2013/02/21/north-carolinas-revenue-forecast-signals-meager-growth-and-murky-economic-outlook/
URLs in this post:
 revenue forecast: http://www.ncleg.net/documentsites/committees/JointAppropriations2013/2013%20Session/February_5-6_2013_Meeting/2_Revenue_Overview_Joint_Approps_2013-02-05.pdf
 far more than was originally estimated: http://www.ncjustice.org/sites/default/files/BTC%20Brief%20-%20Business%20Tax%20Exemption_0.pdf
 $106 million: http://www.newsobserver.com/2013/02/12/2674922/dome-tillis-plays-finders-keepers.html
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