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State forecasts $3.25 billion surplus

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The consensus revenue forecast for North Carolina was released on Wednesday, projecting an extra $3.25 billion in state revenues for Fiscal Year (FY) 2022-23. With those extra funds, the revised revenue forecast for FY 2022-23 is $33.76 billion.

This consensus forecast is an essential component as the state begins its budget process. The press release puts the revenue forecast for the biennium (FY 2023-24 and 2024-25) at $67.35 billion, with each year seeing a slight decline in year-over-year General Fund revenues.

The budget process for this long session will begin with a proposed budget for the biennium from Gov. Roy Cooper, followed by a proposal from the House and then the Senate.

“These increased funds are needed desperately to pay our teachers more, fund our schools, provide quality child care for parents in our workforce and to pay for the tax cuts for working families that we put in place last year,” Cooper said in the press release. “I hope we can negotiate a bipartisan budget that makes these investments without more tax breaks for the wealthiest among us.”

In a separate press release, Senate President Pro Tempore Phil Berger, R-Rockingham, laid credit for the surplus at the feet of Republican tax policies.

“Today’s consensus revenue forecast confirms that North Carolina’s tax policies are fueling economic growth,” he said, adding later: “While this year’s surplus is welcomed news, we need to be cautious as we prepare the budget. We must continue to prioritize responsible spending, addressing our state’s workforce needs, and providing additional tax relief to our citizens.”

House Speaker Tim Moore, R-Cleveland, weighed in via press release as well, saying that the surplus showed the economic strength of the state. He also hinted at what the public might see in a biennium budget.

“I am confident that as we continue to address some of the state’s most pressing needs, we will continue doing so in a fiscally responsible way that leads to even more growth for North Carolina,” he said in the press release. “This is the approach we will take as we consider our budget priorities of targeted raises for law enforcement and other key personnel, greater investments in infrastructure, and workforce development initiatives.”

The consensus revenue forecast credits a variety of factors for creating the surplus. These include:

  • “Smaller-than-expected decline in individual income tax collections”
  • “Persistently high corporate profits”
  • “Resilient consumer spending”
  • “Higher-than-expected investment returns on the General Fund balance”

The consensus revenue forecast is created by the Office of State Budget and Management in conjunction with the General Assembly’s fiscal research division.

You can see the consensus revenue forecast here.