Update: On May 10, the Office of State Budget and Management and the General Assembly’s Fiscal Research Division released a revision to April’s Consensus Revenue Forecast. Due to actual April personal income tax (PIT) collections falling short of expectations, the revision adjusts the General Fund Forecast downward by $225 million in the current fiscal year and downward by $205 million in the next fiscal year. April’s Consensus Revenue Forecast anticipated $1.4 billion in overcollections for North Carolina, and May’s updated projection adjusts that number down to $987 million for Fiscal Years 2024 and 2025. With this downward revision, legislative leaders will have even fewer dollars to work with to meet the mounting needs described in the following post, from public education to the child-care crisis and more.
Each year, the North Carolina Office of State Budget and Management (OSBM) and the Fiscal Research Division (FRD) release a Consensus Revenue Forecast that projects how much tax revenue the state can expect to collect. The forecast represents an agreement — that’s the “consensus” part — between the legislative and executive branches about how much money the state has to work with in creating a balanced budget.
This year’s forecast was released last week, and most headlines will focus on the fact that North Carolina is projected to collect $1.4 billion more than expected over Fiscal Years 2024 and 2025. Far from a cause for celebration, though, the forecast is a sobering reminder of the consequences of legislative leaders’ relentless pursuit of tax cuts for corporations and the wealthy: revenue collections that fall short of current needs and a trajectory that calls into question the state’s future ability to fund the public institutions that help our communities thrive.
Anticipated Overcollections Won’t Cover NC Communities’ Needs
Before we allow legislative leaders to crow about this forecast, we should be clear that the additional anticipated revenue won’t come close to covering unpaid bills, meeting current obligations, and covering the backlog of needs in North Carolina communities.
The unexpected funds in just this current fiscal year won’t cover the amount that is past due to the state’s public education system as part of the Leandro case. According to court rulings, the state still owes $678 million to fund two previous years — Fiscal Years 2022 and 2023 — of the eight-year Leandro Plan and uphold its constitutional obligation to provide a sound basic education to North Carolina children.