As our readers know, we have been closely watching the revenue picture in North Carolina. Last week Governor Bev Perdue said that our state expects to see a 1 billion dollar deficit for the 2010-2011 short session budget and possibly a 3 billion dollar deficit for the 2011-2013 budget. Here is what the Triangle Business Journal is saying about the tax collection picture in North Carolina.
North Carolina tax collections down $35M as consumers cut spending
Triangle Business Journal - by Lee Weisbecker
Members of the North Carolina House of Representatives could be facing a revenue gap when they return to Raleigh this spring.
State revenue collections were off by $35 million through the first seven months of the government’s fiscal year as consumers continued to sit on the sidelines, a new General Assembly economic forecast says.
The revenue gap on the state’s $11 billion collection target would have been wider had it not been for a special corporate income collections effort on the part of the Department of Revenue, which brought in $472 million, $272 million more than anticipated.
What lies ahead for North Carolina, says the report’s author, General Assembly fiscal researcher Barry Boardman, depends how fast “the sluggish economic recovery” is able to take hold.
Payroll withholding tax collections were down nearly 5 percent through January, and sales tax collections continue to come up short.
“Double-digit unemployment has eroded consumer confidence and with continued employment uncertainty, cautious consumer behavior continues.” Boardman says.
Consumers have been hit by a variety of things, tight credit, loss of household wealth and lower (inflation adjusted) wages than before the start of the recession. Wage and salary income fell 3.3 percent in 2009, he says.
Boardman adds that he doesn’t foresee much relief on the wage front anytime soon.
Wages and salaries are forecast to growth by only 1.3 percent in 2010, he says.