Some good state budget news
The news hasn’t been good in recent years for North Carolina’s state budget. With the recession, revenues have lagged, and that resulted in our elected state officials having to make some tough budget choices. But things are looking up a bit, says N.C. State University economist Mike Walden.
“Well … the latest data show that in the first two months of the current fiscal year — and recognize the fiscal year for the state begins in July — we’re actually seeing … state revenues running higher than expected. For example, the state sales tax revenues are growing at about 5 percent annually — faster than expected.
“Also, withholding for the individual income taxes (is) rising at about a 10 percent annual rate — also higher than expected. So, this is good news. This means that the state is having more revenue come in. That will help them in terms of their budget.
“Now (the) big question was, well, Why is this happening? I mean, we still have in our state 10 percent unemployment. I think the reason is that despite the fact that we do have 10 percent unemployment, actually consumers’ households are spending more this year than they were last year. That means higher tax revenues and and … people who are employed are working more hours.
“And some of them actually received a slight bump upward in their pay, and that’s working to more earnings, more incomes, and therefore higher income tax revenues.
“Now I do need to caution on this. These trends may not continue. In fact, there is some evidence that the state economy is slowing down. But at least we’ve had a trickle — a trickle — of good news.Category: Economic Perspective