The North Carolina General Assembly on Wednesday started its 2024 session with legislators focused on adjusting the second year of the biennial budget adopted last year and considering bills on other topics.
Budget Work
As a first step in the 2024 budget bill process, staff at the Office of State Budget and Management (its Director is appointed by Governor Roy Cooper) and the General Assembly last week released a Consensus General Fund Revenue Forecast. Legislators use this information to shape spending decisions.
The Forecast was more optimistic than many expected. It predicts that tax collections will exceed revenue budgeted for the year ending June 30 (FY 2024) by $413 million (a 1.2% increase) and that tax collections will be up an additional $1 billion (a 3 % increase) in FY 2025, which begins July 1, 2024. The budget adopted in 2023 had predicted a slight decline in revenue between the two fiscal years in part due to enacted tax reductions. The Forecast cited low unemployment, wage growth and additional consumer spending as contributing to the positive numbers. At the same time, it noted some “revenue risks” such as an “April surprise,” (possible lower revenue collections through April 15), action (or inaction) of the Federal Reserve on interest rates, and material supply issues due to wars.
The House will prepare the first version of the 2024 budget bill. Key legislative budget writers have been quoted as saying that they hope to move this bill through the House in May.
Governor’s Budget Recommendations
Governor Cooper on Wednesday released his 2024 budget recommendations.
His proposal includes additional salary increases for educators and state employees, a statewide bond vote for K-12 school construction, a moratorium on Opportunity Scholarships, which provide funds to students attending private schools, more money for child care and worker training including for health care workers, a reduction in the unemployment insurance tax for smaller businesses, increased weekly unemployment insurance benefits, reinstatement of the Conservation Tax credit and funds for parks, flooding and farmland preservation. It would keep the current 4.5% personal income tax rate for taxpayers above certain thresholds (for example, $200,000 for married couples filing jointly) and reduce the rate for those below the thresholds. It would also maintain the corporate income tax rate at 2.5%.
His proposal can be found here.
Other Possible Issues
Legislators will likely consider a number of issues not related to the budget. These include a bill to legalize and regulate video lottery terminals (VLTs), which could produce significant new revenue for the state. Although “rural entertainment districts” (casinos) were discussed during last year’s session, some legislative leaders have indicated this matter will not be considered this year. Other matters remaining from last year that may surface include ABC law changes (S 527), medical marijuana legalization (S 3), and changes to the Division of Motor Vehicles.
Information about bills and work of the General Assembly can be found at its website: www.ncleg.gov.
For more information, contact a member of the Brooks Pierce Government Affairs Team.
Ed Turlington, Partner
Drew Moretz, Government Relations Advisor
Katelyn Kingsbury, Government Relations Advisor