The upcoming budget debate will be the first one since all of the tax changes written into statute in 2013 have gone into effect.
Raleigh (Feb. 27, 2017) — The upcoming biennial budget debate will be the first one since all of the tax changes written into statute in 2013 have gone into effect, and budget writers will once again feel the constraints of a state tax code that fails to support smart public investments that allow all communities in the state to thrive.
With the reduction in the corporate and personal income tax rate, estimates find that in the next fiscal year North Carolina will bring in $1.9 billion less than it would have under the tax code before the 2013 changes, as Budget & Tax Center Director Alexandra F. Sirota outlines in the BTC Brief, “Tax Policy Choices Continue to Constrain Opportunities for Progress Today.”
“Communities and families thrive only when North Carolina invests in schools, affordable housing, health care, and community economic development,” Sirota says. “But those investments in North Carolina are seriously constrained when lawmakers keep deciding to reduce revenue by giving tax breaks to the wealthy and powerful.”
- State revenue collections aren’t meeting North Carolina’s needs. Even though the state’s revenue collection is coming in over projections, there will still be needs that go unmet. At least $680 million in budget pressures must be met in the next year to achieve required savings, meet enrollment growth in public schools and universities and obligations to retired state employees and debt service. That doesn’t include what’s needed to rebuild in Eastern NC after Hurricane Matthew or meet needs in other areas that continue to fall short.
- North Carolina’s revenue growth continues to underperform historic growth rates. North Carolina had not fully recovered to its pre-recession peak in revenue collections in the second quarter of 2016, the last quarter for which data is available for 50 states. Revenue growth year over year, while improving, is still below the historic average and below where it should be at this moment in the expansion.
- Tax cuts are hurting NC’s revenue growth rate. North Carolina revenues would have been another $551.9 million higher if the state were experiencing the average growth rate it had before the tax cuts in 2013.
The tax code as it stands today not only does not address North Carolina’s economic challenges, but instead undercuts the foundations of smart public investments.
FOR MORE INFORMATION, CONTACT Alexandra F. Sirota, Budget & Tax Director, (919) 856-1468, email@example.com; or Mel Umbarger, Senior Communications Specialist, (919) 856-2567 or firstname.lastname@example.org