Tax cuts did not cause $200 million shortfall
Published August 2, 2014
by Dan Way Carolina Journal Online, August 1, 2014.
There is no $200 million shortfall in the state budget caused by North Carolina’s newly lowered income tax rates, contrary to news reports in a number of media outlets.
“It was the slightly lower than expected growth in salaries and wages that was driving this number,” and had nothing to do with the income tax changes in 2013 that began reducing the top marginal income tax rate of 7.75 percent to 5.75 percent by 2015, said Brian Slivka of the legislative Fiscal Research Division.
The state uses wage and salary projections compiled by firms such as Moody’s Analytics and Global Insight. When the state plugged in those firms’ new projections as part of a routine update of budget impacts earlier this year, it was discovered that salaries and wages did not rise to the earlier projections.
But Fiscal Research staff noted the slight lag in its April Quarterly General Fund Revenue Report, and revised its economic outlook accordingly. By updating all numbers, what would have been a $205 million revenue shortfall due to lower wages and salaries in 2014, and a $200 million revenue shortfall for the same reason in 2015, was accounted for going forward.
A table included in a July 24 memorandum to Sen. Josh Stein, D-Wake, showed the $205 million and $200 million revenue differences as compared to original, unrevised July 2013 baseline estimates. Those differences have appeared in a number of subsequent media reports. But if that table had included an update with revised wage and salary projections for the 2013 baseline year, those revenue gaps would have disappeared, Slivka said.
Barry Boardman, the chief economist at Fiscal Research, addressed the press coverage of the revenue differences in a July 25 email to legislative leaders, legislative committee chairmen, and his Fiscal Research colleagues:
I wanted to notify you that press reports related to a memo we completed yesterday are completely mischaracherizing the results of that memo,” the email said. “Per a request, we used the tax model to see what if any changes would arise from the model when incorporating the latest IRS Statistics of Income data (2012) as it relates to H998. We could not discern any difference in outcomes. The tax model had also been updated to include the most current economic forecast and that is the predominate change in the results. The revenue reduction has nothing to do with provisions in H998. It is simply the fact (as noted in the May 2014 consensus forecast) that wages did not grow as fast as forecasters envisioned a year ago. Hopefully, it is obvious that if you project the same pace of growth but against a lower starting base you will end up with a lower number — that is all that the memo reported and I had thought rather clearly.
Slivka said, “We probably should have also included what forecasts would have done to 2013 [numbers] as well.”
Dan Way is an associate editor of Carolina Journal.
http://www.carolinajournal.com/articles/display_story.html?id=11271
August 2, 2014 at 8:48 am
Richard Bunce says:
Chris Fitzsimon's head explodes!
August 2, 2014 at 11:12 am
Norm Kelly says:
First it is extremely important to note that waaaay toooo many media types, both print & video, are majorly biased in the leftist direction. Too often our media types give credit to libs where NO credit is due. On the flip side, too few media types give any credit to Republicans when credit is actually due. Take the fact that some 350'ish bills were passed by the Republican house, but sit on senile Harry's desk getting no action in the Senate. When the occupier refers to 'a do-nothing Congress', libs in Congress pick it up, the media simply runs with this quote. How many in the media have asked the senile Harry, the 'moderate' K, or the occupier why they claim a do-nothing Congress when referring to the House Republicans, but say nothing about the Senate that actually is doing nothing? Why is it that the Senate does NOT pass a budget in years and yet the demons & their ally media types say virtually nothing about this lack of doing their job? So, it's important to note that if a report comes out showing that Republicans did not purposely scr-w citizens of NC, don't expect media types to treat it with any honesty.
Second, how many times in this century, when the Socialist Party was in control of Raleigh, were we repeatedly told that there would be a multi-million dollar shortfall in the budget? How many years in a row were we told that the budget had been cut to the bone, taxes & fees had gone up as had spending, yet as the end of the year approached, reports from Raleigh were that the state take was going to be short?
The media type allies of the demon party may have short memories, may want us to have short memories, but some of us have some memory left and all of us have the ability to do web research. Some of us remember being told by our local reps that spending was cut, taxes were cut, when in fact it was the second year of a two year budget. The amount of spending increase proposed in the 2nd year of the 2 year budget had been reduced. So the increase wasn't as large as the demons wanted it to be so they call it a spending cut. They did the same thing with taxes. In the first year they implemented a tax increase. The 2 year budget proposed another tax increase in the second year. But during the short session, the demons managed to cut the amount of the tax increase, so they called it a cut in taxes. Both misrepresentations of the truth resulted in increases, but lower increases than they wanted to foist upon us so, just like the socialists at the central planner level, the local demons claimed cuts.
Demons implemented temporary sales tax increases. Yet they still claimed budget shortfalls as the year end approached. Then they converted the temporary sales tax increase to a permanent sales tax increase. And still as the year end approached we were told of a budget shortfall.
So what's the diff now versus then? Then it was the demons in charge and everything they said or did was proper & correct. Now it's the enemy in charge and everything they do is wrong, improper, and most of all racist. Not completely racist mind you. Cuz some of the reason that Republicans are despised is because they hate children. If it weren't for being racists and hating children, what the Republicans do would be as welcomed as what the demons do. (remember it was the demons who took a $2billion loan from the central planners with no plan to pay it back! which amounted to a $2billion budget shortfall.)
Providing scholarships for kids to attend the school of their choice isn't because Republicans want to allow parents to make choices that are best for their kids. These scholarships exist because Republicans HATE the public school system and want to allow more poor white folks to leave the blacks behind in inferior schools.
Reducing taxes across the board, including the sales tax, has nothing to do with allowing people to keep more of their own money. It has to do with . . . I'm not sure what demons think on this exactly because what they say about it is so illogical and has no point. Somehow this is considered racist and hating poor people. But since their explanations/complaints about reducing taxes make no sense, have no coherent thought process behind it, I'll just accept that reducing taxes is based on racial hatred AND hatred of children. I'll give this one to the demons, because it's just so stup1d that it's not worth arguing about.
No matter what the facts are about the current budget, demons everywhere, media types, pols, editorialists, Chris, won't accept the information as being valid. They will continue to argue that the budget was built on incorrect information, was built on their hatred of 'certain groups', or anything that makes no sense but pops into their heads. None of it will be worth reading; all of it will be based on trying to stir the base so demons can control Raleigh once again. It may have something to do with keeping the 'moderate' K in office, demonizing Tillis. But all of it will be based on 'misinformation', to use a good lib term.
August 5, 2014 at 1:11 pm
Richard Pacheco says:
As usual, nothing is attributable to just one cause...
