RALEIGH, North Carolina — North Carolina's tax coffers received a bump thanks to April 15 collections — an uptick that's still caused analysts to lower revenue projections for the next two years.
The General Assembly's top staff economist and Gov. Pat McCrory's budget office now expect the state to collect $406 million more in revenue than originally anticipated by the fiscal year's end June 30, according to an email obtained by The Associated Press.
Overcollections were $110 million through March, but economist Barry Boardman told lawmakers in the email that growth was higher than anticipated because more taxpayers decided to report income in 2012 for fear of higher federal taxes in 2013 and future years. Congress approved higher tax rates for top wage earners early this year.
The legislature can now expect $20.4 billion in revenues for the current fiscal year, or 2 percent higher than the $20 billion used to fashion this year's budget, Boardman wrote. But he cautioned that the forecast is more volatile than usual because the state has had little experience calculating the use of a relatively new state tax break on the first $50,000 of a taxpayer's business income.
The April 15 results, according to Boardman, have lowered expectations for tax revenue for the 2013-14 and 2014-15 years because there may now be less income, capital gains and dividends to report and be taxed. Executive and legislative branch staffers now predict revenue growth will be $101 million less than anticipated in the next fiscal year starting July 1 and $126 million less for 2014-15.
The information is important as legislators draw up the next state government budget. The Senate expects to unveil its spending plan later this month.
Sen. Pete Brunstetter, R-Forsyth and a chief budget-writer in the chamber, said Friday he envisions placing unanticipated additional funds this year in next year's budget in the savings reserve or toward one-time repairs and renovations or capital projects. That's because legislators know they can't count on a similar increase next year.
"We will tend to be fairly conservative with the use of them," Brunstetter said.
It's possible legislators could use some extra funds this year to pay down a shortfall in the state's Medicaid program that's been recalculated at $248 million, or more than double the earlier count. A bill introduced to deal with any shortfall in part would pool unspent funds from state agencies to pay Medicaid bills to providers. Brunstetter said the state has yet to touch a Medicaid reserve to deal with the shortfall.
Once the Senate passes a two-year budget, the House will approve its own version. GOP leaders in the two chambers then will negotiate a final two-year plan to present to McCrory — also a Republican — that they hope he will sign.