April 15 tax collections keep N.C. on track for budget surplus

This article appeared on Friday, April 30, 2004 in the Winston-Salem Journal

RALEIGH

North Carolina should have a budget surplus of at least $190 million this fiscal year, the first spending plan in the black since 2000, according to preliminary figures from April tax collections.

After three years in the red, one with a budget shortfall of $1.6 billion, North Carolina is on track to collect more money than it projected for this year’s $14.8 billion budget.

In a memorandum sent Thursday to legislative leaders, fiscal analyst Dave Crotts said collections from the key April 15 returns show personal income tax payments were at least $56 million above target.

April 15 also marked the date for the first round of estimated tax payments for individuals and corporations this year. The individual estimated payments rose by 11 percent during April compared to a year ago, while the corporate payments fell by 1 percent, Crotts said.

The surplus means more money likely will be available to help pay for state employee raises, school enrollment increases and Medicaid cost adjustments when the next fiscal year starts July 1.

The cost range for these and other unfunded priorities range from $500 million to $800 million, said Crotts, whose office is working to firm up the price tags and fund availability for 2004-05.

The General Assembly convenes May 10 to adjust the second year of the two-year spending plan passed last summer.

The recession and sputtering recovery have prompted revenue shortfalls going back to the 2000-01 fiscal year. Gov. Mike Easley was able to meet a $221 million shortfall last year without deep, wholesale spending cuts.

Revenues had stayed ahead of budgeted projections during this calendar year, but legislators and Easley administration officials had been waiting anxiously for the April 15 numbers. Individual income tax payments represent about half of all general fund revenues.

Easley has held back an additional $200 million this fiscal year by retaining amounts equal to 2 percent of the money headed for state agencies.

Easley, candidates for the Republican gubernatorial nomination and the state’s top business lobby have been talking about asking the Legislature to reduce the corporate income tax rate. It could cost $223 million to do so if it drops by 1 percentage point to 5.9 percent.

A legislative committee Thursday recommended making businesses exempt for the first $20,000 in their corporate income tax bills, at a cost of about $30 million.

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