NC’s revenue challenge persists despite latest revenue forecast

The ongoing economic recovery has bypassed many North Carolinians and communities across the state. This isn’t surprising news, but it is the reality that we should keep in mind when thinking about how to use $552.5 million in public revenues that are expected to be collected above state’s official’s initial projection.

This revenue forecast is certainly good news for North Carolina, particularly given how much revenue is needed to ensure that all communities thrive and that economic prosperity is broadly shared. Unfortunately, even with the anticipated over-collection, we still don’t have adequate resources to address all of the state’s economic needs.

North Carolina faced a similar reality in recent years amid a modest, yet steady economic recovery. For the 2015 fiscal year, revenue collections were $400 million above original projections. This positive news on the revenue front didn’t erase the tradeoffs lawmakers faced regarding state budget decisions last year, however. Sufficient revenue was simply not available to address the various stated priorities among lawmakers. Meaningful pay raises for teachers and state employees, reducing class size for K-12 classrooms, investing in economic development initiatives, boosting funding for early learning opportunities, among others, were all worthy public investments. However, there just wasn’t enough available revenue for all of these priorities.

Lawmakers will face the same conundrum this year. Choices will have to be made regarding providing additional relief funding to communities devastated by Hurricane Matthews, boosting teacher pay, expanding early learning opportunities, infrastructure investments, and access to an affordable higher education, among other public investments.

The hope now is that state lawmakers patch as many holes as they can with $550 million in additional revenue, and think about how to address the many pressing needs that will still be left unaddressed.

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