When is finding an extra $457 million in your bank account not a cause for celebration?
This is such a bizarre year that even what appears to be great news isn’t. It’s like reaching into the pocket of newly washed pair of jeans, finding a hundred dollar bill and not being excited.
The North Carolina legislature got a report this week that the state collected $457 million more in revenue in the 2019-2020 fiscal year than anticipated. The news is from the General Assembly’s nonpartisan budget staff.
In a press release the budget staff stated, “Most of the over collection was due to a lower-than-expected shift in income tax payments due to the movement of the deadline from April 15 to July 15…This amount would not be recurring and it may put negative pressure on the 2020-21 [revenue] forecast.”
In plain English, that means when the income tax deadline was moved from April 15 in the 2019-2020 fiscal year to July 15 in the 2020-2021 fiscal year, the budget analysts assumed that people would take advantage of the additional three months and hang on to their money. But far more folks than estimated decided to ignore the deadline extension and pay their taxes before they were due.
The press release from state Sen. Harry Brown (R-Onslow) states, “This does not mean the state has more money to spend. It means the state likely took in some money last year that it won’t take in this year.”
Brown said, “Beware of budget gimmicks from Gov. Cooper and Democrats. If and when Gov. Cooper submits his budget proposal, which is about four months late, he may try to use this ‘extra’ money. That would be outrageously irresponsible, reckless and negligent. That same spend now, ‘pray later’ strategy resulted in teacher firings and salary cuts during the last recession.”
That $457 million is currently in the unappropriated fund balance, what is roughly equivalent to a person’s savings account, which means the temptation is to spend the money on some of the state’s current needs.
However, according to the General Assembly’s budget staff it’s not excess or extra money but only appears as such because the state’s fiscal year ends on June 30, which means the original April 15 deadline and the highly unusual July 15 deadline were in different fiscal years. So the “extra” $457 million in the 2019-2020 fiscal year most likely represents a $457 million hole in the 2020-2021 budget forecast.