NC Legislative Update
by Cady Thomas
The House and Senate have agreed to a spending package for the next year of $25.73 billion compared to the governor’s proposal of $27.3 billion. This is the latest we have started the budget process at the NCGA and we will likely be into the next fiscal year before we have a budget. Once the Senate passes their budget, it will go to the House who will pass their version. A conference committee will commence upon its return to the Senate. Finally, it will be sent to the governor. We expect the remainder of the federal funds appropriated to NC under the American Recovery Act funds to be in the budget, along with the Senate’s tax plan.
Bills and Legislation
The Senate passed a bill overhauling the NC tax code last week which will reduce taxes by over $2 billion in the next 2 years alone. Some of the major provisions of the legislation are:
Cutting corporate income taxes to 0% over 5 years;
Cuttings personal income taxes from 5.25% to 4.99%;
Simplifying and reducing the franchise tax;
Increasing the standard deduction and the child tax deduction
Enacting SALT cap election for pass-through entities; and
Enacting the JOBS grant program, with the maximum grant amount of $18,750.
The House finance chairs have expressed general support of this bill with the exception of the JOBS grant program. They would prefer to use those funds to allow businesses who took PPP loans to deduct the business expenses paid with those loans from their income taxes for the next two years. Ultimately, tax changes will be included with the budget.
Numbers as of June 1:
1,009,198 total cases
510 currently hospitalized
2.7% percentage of positive tests each day
51% of adult population fully vaccinated
Other Important Items
NC Consensus Revised Revenue Forecast
The Fiscal Research Division and the Office of State Budget and Management predict NC will collect an additional $6.04 Billion in revenue when compared to the May 2020 forecast. This represents an increase of 13.6% total general revenue. An additional 8.9% growth was projected over the next 2 fiscal years.
In response, Senate President Pro Tempore Phil Berger said, “A huge surplus does not mean we’re spending too little. It means we’re taxing too much.” House Speaker Tim Moore responded, “There is no question that the strength of North Carolina’s economic outlook is proof that Republican policies work, and it is no coincidence that our state is the number two destination for Americans fleeing other states with bleak economic outlooks.”
The full forecast can be found here.
The Senate Transportation Committee held a meeting where NC Auditor Beth Woods gave her report on NCDOT’s report on the usage of advance construction projects done with federal money.
The NCDOT was required to do the report in legislation the NCGA passed in 2020. Auditor Woods reported the DOT report was not complete, “inaccurate,” and not intuitive. She also mentioned that the Senate would not be able to get the information they wanted and needed from DOT’s report.
A question was asked about whether or not the DOT Board had heard her findings, to which she responded they have not requested to hear from her. Additionally, the Committee members asked if DOT had acknowledged they needed to rework the report. She stated she had talked with the Secretary.
Senators shared Auditor Wood’s criticism and concerns about the report.
Division 14 won a national award for the Corridor K Improvements highway project in Graham County.