What will COVID-19 do to the state budget? NC lawmakers will return to more uncertainty

The state legislature is set to return early next month, but lawmakers likely won’t have detailed information during their session to determine if budget adjustments are needed.

The legislature’s top economists had hoped that July’s delayed income tax filing deadlines would result in a clearer state revenue forecast this month, but they said last week that the forecast will now have to wait until late September.

“Unfortunately, we are still facing significant economic uncertainty along with new uncertainty about federal policy and the Fiscal Research Division does not expect to have the information necessary to issue a revised, line-item forecast until late September,” division leaders Barry Boardman and Emma Turner wrote in an email to legislators last week.

“This will allow for us to have August revenue collection data, some clarity on the rules to implement the president’s executive order issued over the weekend (on unemployment benefits), and an answer on whether Congress will or will not appropriate any additional relief packages.”

The email notes that uncertainty surrounds the future trajectory of the COVID-19 pandemic — are cases going to increase or decrease? — as well as the likelihood of more business reopenings.

And since Congress is still in a stalemate over coronavirus relief legislation and the extension of additional unemployment benefits, federal aid to the states remains unknown.

“This means we are operating with as much uncertainty as we were back in May,” Boardman and Turner wrote. “While our current economic forecast assumes some federal relief, without the extension of federal assistance many forecasters are projecting a ‘double dip’ recession, which would negatively impact the revenue forecast we currently have.”

The email concludes that it’s also possible that the next revenue forecast could get delayed even further.

“We do caution that if by the end of September the pandemic has not subsided in some measurable amount to where we can sort out the economic effects on the state, we could be delayed again,” Boardman and Turner wrote. “We are in a very unpredictable circumstance with respect to assessing economic activity.”

The legislature is set to return on Sept. 2 to handle appropriations of federal funding and appointments. Pat Ryan, a spokesman for Senate leader Phil Berger, said Monday that the session “will move forward as planned” even if there’s no action from Congress.

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