Despite revenue downgrade, North Carolina anticipates nearly $1B more in cash

RALEIGH, N.C. (AP) — North Carolina officials downgraded a projected state revenue surplus through mid-2025 by $430 million on Friday, citing lower than anticipated April 15 individual income tax payments due to recent business tax changes. Still, the state expects nearly $1 billion more to enter its coffers.

Last month, economists working for Democratic Gov. Roy Cooper’s administration and at the Republican-controlled legislature predicted formally that collections would exceed revenue budgeted for the year ending June 30 by $413 million. And that jump, they determined, would lead to another $1 billion more received in the fiscal year starting July 1 than projected in the current two-year state budget.

Now the consensus forecast indicates that the overage for this fiscal year will now be $188 million, with another $799 million expected next year, the Office of State Budget and Management and the legislature’s Fiscal Research Division said.

The economists had warned that a forecast revision might be necessary if April collections, which are usually the most volatile, deviated significantly from estimates. That’s what happened, according to the agencies. Personal income tax refunds were higher than anticipated and final payments were lower than expected, as a 2022 tax change that let certain corporations and partnerships pay state taxes, rather than owners or shareholders, for favored tax treatment led to some duplicate payments.

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