Perry and Humphrey react to anticipated revised General Fund $1.9 billion surplus
The state of North Carolina is projecting an increase of $1.9 billion over previous estimates. Neuse News reached out to NC Senate Majority Whip Jim Perry and NC Representative Chris Humphrey for their response to the revised General Fund revenue forecast.
“I am glad we see a surplus,” said Perry. “The vast majority of those funds are the one time impacts of capital gains. When we think about any spending, it is important that we not try to fund any recurring expenses with non recurring (one time) funds.”
According to the report released by the Fiscal Research Division, inflation became widespread and surged to 8.5% in March 2022, the highest level seen since January 1982. Nevertheless, consumer demand outpaced inflation.
“NC has a low tax rate and we continue to try to reduce burdensome regulations,” said Perry. “Additionally, we are very careful to not spend above sustainable levels. We have seen that happen in the past, and the result was terrible.”
The revised forecast projects an economic slowdown in FY 2022-23, although it does not predict a recession within the next 14 months.
Humphrey said, “The consensus revenue forecast is an indication that, in spite of the surging cost of goods and rapid inflation, our responsible fiscal policy of low taxes, reasonable regulations, and responsible spending continue to position our state as the best place to live, work, and raise a family.”
Perry and Humphrey, both Republicans, represent Lenoir County in the General Assembly.
“I trust we will continue to be prudent, and cautious, as we work through these unprecedented times,” said Perry.
The previous biennium budget took three years to pass due to negotiations gridlocked between the governor and the General Assembly.
“I’m looking forward to working on a short session budget that will help our economy, create more good-paying jobs, and benefit the hardworking taxpayers in Eastern North Carolina and across the state,” said Humphrey.
REPORT HIGHLIGHTS
On May 9, 2022 the Fiscal Research Division and the Office of State Budget and Management have reached a consensus on a revised General Fund revenue forecast for fiscal year 2021-2023. Listed below are the highlights of that report from the May 2022 Revision report.
Upward Revision Biennial General Fund revenue is expected to be $6.2 billion (10.8%) higher than the certified budget.
Job Growth is Stronger than Expected Recent revisions to employment data show stronger than estimated job growth.
Inflation reached a 40-year high in March 2022 at 8.5%.
Significant stock market returns and corporate profits in 2021 were not anticipated and generated significant revisions to the forecast.
The revised forecast does not foresee a near-term recession.
Inflation is expected to decelerate but remain high during FY 2022-23, particularly because of uncertainty surrounding future consumer spending.
This year’s “April Surprise” was especially positive, leading to final and extension payments now projected to exceed prior projections by over $1.4 billion.
Sales tax and corporate income tax collections are both estimated to exceed the previous forecast.
The likelihood of actual collections deviating from this forecast is heightened because the Department of Revenue was still processing April returns when this forecast was produced and last year’s State budget allowing certain business entities to change how they pay income tax.
Individual and corporate income tax revenue’s high performance is partially due to one-time revenues unlikely to occur again in the upcoming year.
Although year over year revenue from the certified budget are expected to grow by 1.2% in FY 2022-23, revenues are expected to decline by 5.9% relative to the prior year primarily due to timing issues.
Greater than expected sales tax and use revenues significantly contributed to the forecast’s upward revision.
