RALEIGH, N.C. (WNCN) – Economists in North Carolina’s legislative and executive branches on Friday revised down their expectations for the state’s budget surplus by $430 million.
Last month, they projected a $1.4 billion surplus over two years. The new estimate is $987 million. They anticipate a surplus of $188 million in the current fiscal year and $799 million in next fiscal year.
The economists in the legislature’s Fiscal Research Division and the Office of State Budget and Management says tax collections in April fell short of expectations, prompting the revised forecast.
“Despite this downward revision, the economic outlook for North Carolina remains unchanged, with no effect on the state’s long-term growth,” the report reads.
In April, state economists said the economy had demonstrated “greater resilience” than they had expected a year ago and believe there will be a “soft landing” as inflation eases.
The new forecast will be key as the legislature considers what to do with that money. Republican lawmakers have targeted early June to roll out their budget proposal.
Last week, the Senate passed a bill on a party-line vote to boost funding for the state’s school voucher program, the Opportunity Scholarship. That bill calls for an additional $248 million next school year and an additional $215 million in recurring spending each year after that.
On Thursday, Senate leader Phil Berger (R-Rockingham) told CBS17 that discussions were underway about whether to issue rebates to taxpayers from the surplus but he cautioned it would be dependent on how much money is ultimately available and how substantial the rebates could be.
“We’re looking at it. But, I don’t think there’d be an interest in doing it unless the amount we can send out would be an amount that would make a difference. More than a half a tank of gas and stuff like that,” he said.
The State Employees Association of North Carolina is urging lawmakers to use the surplus funds to improve pay for workers. On average, state employees are currently set to get 3% raises in July. SEANC is calling for that to be increased to 5% and a 2% cost of living adjustment for retirees.
The vacancy rate in state government jobs surged during the pandemic, with about one in four jobs unfilled.
“Taxpayers are paying for all of the services. They should be getting them. You can’t do it without people. And people will leave if they’re not getting paid enough to do the job,” said Ardis Watkins, executive director of SEANC. “Nobody expects if you work for the government you’re going to make as much as you would in the private sector. But, you also don’t expect to take a vow of poverty to work for the government.”
Gov. Roy Cooper (D) also has called for higher pay, proposing an 8.5% increase for public school teachers. He also wants a moratorium on the school voucher program, saying that money should be used for public schools and helping childcare centers on the brink of closure once funding from the pandemic runs out.
He posted on X Friday, “The State Budget Office and legislative economists regularly update these forecasts. They’ve made clear that we have the surplus to raise teacher pay- legislators should invest in public schools, not taxpayer-funded private school vouchers for the wealthy.”
Michael Hyland
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