State Revenue Forecast Exceeds Expectation, Legislature Back Next Week
It’s another sunny day for North Carolina’s state budget, but some leaders are already cautioning against spending given the potential for storms ahead. A forecast of state revenue released Monday shows multiple reasons for the promising outlook for the state’s finances, including higher-than-expected job growth and higher-than-expected revenue from sales tax and corporate income tax.
But while state collections may be exceeding expectations, the outlook “faces significant headwinds,” according to the report. The consensus forecast is a joint effort of the nonpartisan Fiscal Research Division in the state legislature and the Office of State Budget and Management, which is part of Gov. Roy Cooper’s administration. The forecast reports “an elevated risk of recession during the forecast period given geopolitical uncertainty and evolving monetary policy by the Federal Reserve to address high inflation.” It adds that despite the risk, the legislative and executive branch economic experts do not foresee a “near-term” recession. The Consumer Price Index was up 8.5% at the end of March.
Here’s what else the forecast shows:
- Inflation is expected to remain elevated but decelerate during the upcoming fiscal year that starts July 1.
- Consumer spending direction is unclear given the impact of inflation’s potential to slow consumer demand for higher prices.
- Revenue for the upcoming fiscal year is estimated to increase by 6.8%, or $1.9 billion, of the budgeted amount.
- The revenue forecast shows an increase of $4.2 billion in revenue for this current fiscal year.
The state budget passed in November 2021 is a two-year budget, but there may be new legislative spending passed in the upcoming session that starts May 18. Republicans, who hold majorities in both the House and Senate, don’t appear to take the windfall as a plan to spend more. “Today’s forecast highlights the General Assembly’s winning formula of low taxes, reasonable regulations, and responsible spending. Our state continues to experience growth and record-breaking economic development coupled with regular revenue surpluses,” House Speaker Tim Moore and Senate leader Phil Berger said in a joint statement.
They also criticized President Joe Biden, a Democrat. “While this is promising news, we must be cognizant of the national economy and the precarious position the Biden administration has put the American people in thanks to rising costs and runaway inflation.”
Cooper, a Democrat, did not mention numbers in his statement about the forecast, but listed his spending priorities. “Our state is strong in many ways and it’s more important than ever to build on our success by investing in good schools, quality healthcare, resilient infrastructure and clean air and water. Tough times have made North Carolina stronger and we can build a foundation for the future,” Cooper said.
Democratic leaders in the legislature mentioned similar priorities. They called the forecast “great news” and credited Cooper. “It is great news that North Carolina is experiencing record job growth as we rebound from the pandemic thanks to Governor Cooper’s leadership,” House Democratic Leader Robert Reives and Senate Democratic Leader Dan Blue said in a joint statement.
Cooper and Republican lawmakers had a stalemate over the budget in 2019 and finally came to an agreement for the 2021 budget, with the governor saying he signed it into law because the “good outweighed the bad.”
Blue and Reives also brought up pay for state employees, who are receiving at least a 2.5% raise this year as part of the 2021 budget legislation, and teachers, who are getting an average 2.5% raise. “It is also encouraging that workers’ wage growth is exceeding expectations. We need to make sure that teachers, public safety officers, education workers, and all state employees receive pay raises that will help us recruit and retain the best people,” they said.
While the legislature is back next week the day after the May 17 primary election, no voting sessions are expected before the week of May 25.
Building Component Manufacturer Moving to NC
Atlantic Building Components & Services announced Thursday that it would bring more than 100 jobs to the Fairmont area. The company, headquartered in Moncks Corner, South Carolina, is a manufacturer of trusses. Renovations to the building on East White Pond Road, which formerly housed N7, Munsing Wear, and South Robeson Knitting Mills in its history, will begin as soon as next week, company president Jimmy Broach said. Fairmont Mayor Charles Kemp called the expansion a “blessing and a very positive step in the growth of Fairmont.” The company plans to be fully functional by August and will work next week to coordinate hiring efforts, he said. Wages begin at $15 an hour and can exceed $18 an hour.
Among agencies that partnered to make the project possible were Robeson Community College, the N.C. Rural Infrastructure Authority, the Economic Development Partnership of North Carolina, Robeson County Committee of 100, NC’s Southeast and the North Carolina Department of Commerce, according to the press release. “With the collaborative effort of this team, Atlantic Building Components will receive $ 1,045,000 million in a Job Development Investment Grant (JDIG) funds to renovate the property to their needs, as well as $136,500 in training dollars through the NC Community College System’s Customized Training Program, and $500,000 is pending for RIA building reuse,” the release states.
PNC Arena Upgrades
Three days after NHL commissioner Gary Bettman underlined the importance of upgrades in and around PNC Arena to both the Carolina Hurricanes and the league, the Centennial Authority voted unanimously in a special board meeting Thursday to extend and expand existing relationships with consultants on both fronts, restarting a long-stalled process.
“We have an opportunity to take this facility in a completely different direction,” chairman Philip Isley told Centennial Authority members Thursday. The authority, the government-appointed board that oversees the arena on behalf of Raleigh, Wake County and the state, will ask HOK and Ratio to update the arena enhancement plan prepared in 2019 for current arena trends and construction costs and prepare a menu of possible upgrades at various cost levels for the city and county to approve at some point next year.
Three years ago, the authority was looking at a $200 million package of upgrades; that price will certainly be higher now. Meanwhile, CAA Icon, which advised the authority on negotiations over last year’s arena lease extension with Hurricanes owner Tom Dundon, will be further employed to develop a master plan for development inside and outside the arena, a project Dundon has declared his intention to pursue. “Either would have been fine,” Isley told The News & Observer afterward. “Having both is great because we now can say we’re moving forward on both the enhancements and whatever the vision will be out there. I’m pleased we’re moving forward. We’ve certainly been given marching orders from the city and county and these enhancements need to happen. They need to see something sooner rather than later.”