State budget officials on Thursday announced that their latest revenue estimates show North Carolina is headed for a $552.5 million budget surplus this year.
That estimate shows that tax collections are higher than what the state expected this year. And it will give Gov. Roy Cooper and legislators extra money to work with as they develop next year’s state budget.
The state has seen a slightly smaller surplus in recent years: About $400 million in 2015 and $425 million last year.
The estimates come from the legislature’s Fiscal Research Division and the state budget office. Their report says the surplus is “predominately the result of stronger-than-expected wage growth increasing both personal income tax and sales tax collections.” It predicts that this fiscal year’s revenues will represent a 2.3 percent increase from last year’s total.
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But because Cooper and legislative leaders come from opposing political parties, they offered slightly different takes on the positive budget news. Cooper – who’s expected to unveil his budget proposal in a few weeks and send it to the legislature – had some suggestions for spending the surplus.
“Growing revenue projections are welcome news and give us an opportunity to invest in our future with better schools and a stronger middle class, while also making sure those hit hard by Hurricane Matthew aren’t left behind,” spokesman Ford Porter said in a news release.
Legislators will receive Cooper’s recommendations and develop their own budget in the coming months. Senate leader Phil Berger said the surplus is due to legislators’ fiscal discipline, and he indicated that tax cuts could be in the works.
“Even as the majority of other states face revenue shortfalls and budget crunches, Republican state leaders’ tax cuts and disciplined spending have generated a $552 million revenue surplus for North Carolina – making us one of just four states in the country expecting surpluses,” Berger said in a news release.
“We hope Gov. Cooper will rethink his pledge to block job-creating future tax cuts for families and small businesses and instead partner with legislative Republicans to stay the course on spending taxpayer money wisely and continuing our state’s record of success.”
House budget writer Nelson Dollar also issued a statement on the surplus, although he did not include specific suggestions for how to spend the money.
“The report is further evidence that tax relief, regulatory reform and responsible budgeting by the state General Assembly have turned our economy around,” he said. “North Carolina must sustain its commitment to creating opportunity and commercial growth through a commonsense, conservative approach to state government.”