Coronavirus in NC means ‘doggone scary’ tax revenue forecast and big hit to the budget
Grim. That’s how one state lawmaker described the revenue forecast for North Carolina.
The latest state revenue forecast released this past week shows a $4 billion hit over the next two years for North Carolina, The News & Observer previously reported. On Tuesday, state lawmakers got a closer look during a joint budget meeting between the House and Senate.
“Pretty grim picture we’re looking at,” said Rep. Donny Lambeth, a Forsyth County Republican. “Some might say it’s even doggone scary.”
Barry Boardman, the General Assembly’s legislative economist, said there is still uncertainty in the forecast, which will be updated again in August. With the income tax filing and payment deadline extended until July 15, because of the coronavirus pandemic, the state doesn’t know yet how much that loss will be.
Then, Boardman said, they’ll have a better understanding of how reopening is going.
Sen. Harry Brown, a Jacksonville Republican who chairs the Senate Appropriations Committee that determines the budget, said they’re going to have to say “no” a lot in the coming months.
“It’s going to mean saying ‘no’ to a whole lot of people, so you need to understand that as we move forward,” Brown told fellow lawmakers.
It’s not clear yet who — and what budget items — will be told “no.”
Emma Turner, with the legislative fiscal research division, said sales tax is the largest driver for this year’s revenue reduction because so many businesses have been closed since March. The largest driver next year will be income tax, she said.
Turner said people continue to spend during recessions to buy necessary items, so the sales tax drop won’t be as large as income tax.
But if a second wave of COVID-19 cases later this year leads to businesses shutting down again, she said that would have an additional “significant impact” on sales tax revenue for the state.
Lambeth said lawmakers are working on spending packages now to bring to the chambers’ committees in the coming weeks.
“Because it is such a tight fiscal year, we’re going to have to be very fiscally prudent, and any dollars we spend, we spend on absolutely necessary expenses,” he said.
This story was originally published May 26, 2020 at 7:26 PM.
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