POLICY & POLITICS
N.C. revenues are $410 million behind last year and $190M short of forecast (AP) — The gap between predicted and actual North Carolina state revenues is widening because of continued tepid personal income tax collections, but improving sales tax collections approaching the holidays helped keep it spreading further. The monthly report on state revenues issued by the Office of the State Controller says revenues are running $410,1 million behind what was collected a year ago. The legislature's top economist confirmed this week revenues are about $190 million below expectations for the first five months of the fiscal year ending Nov. 30. The first-quarter gap through September was $62 million. The rate of revenue collections is also running behind the pace set a year ago. Last year, by the end of November, the state collected 39.6 percent of the total revenues collected for the fiscal year. Currently, the state has collected just 36.9 percent of the revenues it anticipates for the 2014-2015 fiscal year. The critical culprit has been collection of individual income taxes. Not only did the General Assembly cut the tax rate, but the recession and skyrocketing unemployment in North Carolina, which has lagged the nation in recovery, has resulted in many workers returning to the workforce in jobs that pay significantly less then the jobs they held previously. Last summer, a decline in withholdings in the first half of the 2014 calendar year contributed to a $450 million gap in the last fiscal year, making decisions for the current budget written by lawmakers last summer more difficult.