Here’s some astounding news from the non-partisan Fiscal Research Division of the NC General Assembly bean counters. (They’re the ones who scrutinize fiscal facts, figures and revenue outlook trends for lawmakers and help put the data and statistics together in the form of economic forecasts to help come up with a state budget)
According to their North Carolina General Fund Revenue Consensus Forecast put out February 11, “the forecast expects FY 2020-21 collections to be well above the May 2020 forecast by $4.1 billion (17.6%). We expect modest improvement throughout the upcoming biennium, with the worst economic impacts from the pandemic behind us. The current year’s anticipated revenue surplus is helped significantly by Sales tax collections, which increased despite the pandemic.”
Friends, that is incredible news. To be above last May’s forecast by more than four billion dollars is astounding and a tribute to the Reform Majority leadership of the NC House and Senate which has managed the economic calamity caused by the COVID pandemic in North Carolina with wisdom and clarity.
The report pointed out several factors that made a difference in creating a much rosier picture than expected.
- The Federal stimulus money that Congress passed and sent to taxpayers last year impacted our state more than expected, stimulating consumer spending and helping keep small businesses afloat.
- We experienced what the Fiscal Research report called “a K-shaped recovery.” In many areas of our economy, especially in industries with high-paying jobs, the labor force was able to transition in the downturn to “work-at-home” status, enabling those companies to side-step the lay-offs typical with a full-blown recession. Particularly hard-hit by Governor Cooper’s shutdown, according to the analysis, were “service industries, especially in the Leisure and Hospitality and the Retail sectors, where many small businesses are just hanging on or have already closed their doors.”
As a result, “Personal Income withholding and Sales tax collections were surprisingly strong compared to what we expected back in May 2020” – contributing to a much better picture for legislators to work with as they build the next state budget. The economic forecast predicted that “the coronavirus’s economic disruptions will be gone by the second year of the biennium, although the economy will still not be operating at full capacity. It will take until mid-2022 to repair some of the damage, rebuild some of the losses, and catch up to where we would be if the pre-pandemic economic trends had continued uninterrupted.”
The report was hopeful for “modest economic growth” as the COVID pandemic is expected to recede later in the year and that the economy should benefit from whatever stimulus relief Congress passes this spring.
We cheer this good economic news and once again praise the Reform Majority leadership for its discipline and wisdom in holding the line against rash measures as our state navigated uncharted waters in the face of the economic ravages of COVID.
On the other side of the picture, we can only hope that the service industry businesses that were so decimated by Governor Cooper’s shutdowns can somehow bounce back. Hopefully the relative financial health of those who have weathered the downturn financially can benefit service industry businesses by spending money and help this important sector of our economy get back up to speed.