The state cupboard isn't bare, but it's not being restocked very fast
Published December 23, 2014
Editorial by Burlington Times-News December 22, 2014.
The cupboard is a long way from bare, but it’s not being restocked as fast as anyone expected.
It’s the state budget we’re talking about, where revenue isn’t arriving quite the way the fiscal architects predicted. In the first quarter of the fiscal year that began July 1, state revenue collections were $62 million short of expectations. Too soon to worry, the budget gurus said at the time. All the new tax codes will take some time to work out. Collections are likely to improve later in the fiscal year.
So now we’re five months into the fiscal year, and the gap has grown to $190 million. Pretty soon, we’ll be talking real money. The word “shortfall” is being bandied about.
Still too soon to worry, State Budget Director Lee Roberts told the Fayetteville Observer. “We’re not saying that we’re not going to have a problem,” he said. “We’re saying it’s too early to tell.”
That’s the belief of Alamance County Republican state Rep. Steve Ross as well. Ross told the Times-News last week that the “revenue picture is fine.” The member of the House Finance Committee cited a couple of reasons for his optimism.
Lower gasoline prices is one. Ross believes holiday spending will increase, directly related to the declining cost to keep vehicles moving. That should generate more sales tax revenue than originally anticipated. Preliminary national retail figures seem to support this. And the eye test of crowds at Alamance County shopping centers last weekend portend a potential sales tax windfall if all those people were actually buying items rather than being stuck for hours in their cars.
But will this holiday largesse vastly surpass collections so far, which are already up 17 percent, according to the Fayetteville Observer?
And second, Ross said tax reforms will reduce the amount the state pays out in tax refunds.
Fiscal analysts say much the same thing. Income-tax withholding revenue has been significantly lower than usual this year, perhaps because the state’s three tax brackets were merged into a single 5.8 percent tax rate this year. That’s why, budget officials say, refund checks may be slimmer next year, and the state may keep more of that money.
We’ll see.
If the predictions of Ross and his colleagues hold, then more tinkering with tax reform might not be necessary. Ross, for one, is anticipating no changes in the tax system in the long session. Lawmakers need to gauge the impact from the last round of changes before engaging in more, he said. That makes sense. Then again, we’re in a deep hole halfway through the fiscal year. If there is a long-range problem that needs to be solved, then it’s a gamble to wait.
The good news is, the state does have $840 million in savings and Medicaid reserves that it can tap if the shortfall continues.
It’s not an unlimited supply, though. And eventually, any cupboard empties if nothing is there to replenish it.
December 23, 2014 at 8:46 am
Richard Bunce says:
It is said how many people's most pressing issue is increasing government revenue...
December 24, 2014 at 11:17 am
Richard Bunce says:
I said "sad", it typed "said, "how sad" I said.
December 23, 2014 at 8:58 am
Frank Burns says:
As the employment situation continues to improve in NC, the tax revenue can't help but improve. The focus needs to be on cutting costs, not just increasing taxes!
December 23, 2014 at 2:02 pm
Norm Kelly says:
For years the DemocRAT party ruled Raleigh. We didn't just have DemocRAT legislature, we also had Demoncrat Governors. Since at least the beginning of this century it seems all we heard as the fiscal year progressed was how short the budget was going to be. Even though the libs raised every tax and fee they could, told us repeatedly the budget was cut to the bone, we were still told that there would be a shortfall. And then there was the time when Gov Mike stole sales tax money from counties & towns cuz of revenue shortfalls at the state level. Then of course we also need to remember that the E911 fund was raided when the libs were ruling. The libs even did everything they could to refuse to give drivers a break at the pump when the price of gas was going up at the same time the gas tax was going up. Without efforts by the Republican minority, the libs would NEVER have considered giving us drivers a break. They CLAIMED it was because the state couldn't afford NOT to raise the tax.
So, it seems there's no difference between the state budget when libs ruled Raleigh and now that Republicans have been elected to the majority. Except the only difference really is that the libs are doing the whining now about the budget instead of trying to reassure us. And, we don't have every tax and fee being jacked up at the same time as whining about the budget shortfall. Less whining, less taxes, same problems. I think we're better off now than when the socialists ruled the state. I'd rather the state budget be tight AND I get to keep more of MY money! It's always, always, always, better off in my pocket than the state's!
