North Carolina’s state tax collections are projected to bypass predictions by $277 million over the next two years, according to a recent report by state fiscal researchers.
The prediction is a result of nearly $900 million worth of over-collections in the 2018-2019 fiscal year, which GOP leaders have promised to use to refund taxpayers.
The Fiscal Research Division and the Office of State Budget and Management’s September forecast found that the previous predictions in May foresaw collections at 2.7 percent above the budgeted amount. But collections actually came in at 3.75 percent over the budget.
House Speaker Tim Moore said he hopes the state stays on a good financial track.
“The North Carolina House remains committed to growing our economy with smart fiscal policies that provide tax relief, responsible spending, and revenue surpluses to grow our rainy day reserves and fund critical needs like pay raises and disaster relief,” he said.
The May report predicted that final collections for 2018-2019 fiscal year would be $24.6 billion. Final collections ended up at $24.8 billion, $896.6 million over budget.
The researchers now predict that the state will see a revenue increase of $167.4 million in 2019-20 and $110.1 million in 2020-2021 as a result of growth in individual income and sales taxes.
“During the last quarter of 2018, equity markets grew turbulent. Fueled in part about concerns the economy may be rapidly weakening,” the report states.
Even though the predictions point to a healthy state economy, experts say there is still a risk of downfall and the over-collections could be a “one-time” occurrence.
“Additionally, underlying economic conditions have been downgraded modestly since May. Although equity markets have stabilized and the economy is currently on solid footing, there are still signs of economic weakening,” the report said.
Last month, Moore and Senate Majority Leader Phil Berger announced the filing of the Taxpayer Refund Act, a bill that seeks to send back North Carolinians $125 to $250 from the $896.6 million surplus. The legislation passed the Senate on Aug. 27 with a 30-16 vote. It has been stalled in the House since then.