Politics & Government

Final word on North Carolina’s surplus: $445 million

It wasn’t the biggest story of the past week. And it wasn’t the most surprising – this one was expected.

But it’s still worth stopping to take stock of how the state’s finances ended up at the end of the budget year, which was June 30.

Of course, much of the focus under the dome these days is on the next budget, which is somewhere in the air between House and Senate negotiators, who have set an Aug. 14 deadline but seem resigned to going beyond that.

We’re talking about the last budget, which was conceived in 2013 and adjusted and adopted this time a year ago, prompting lots of questions, concerns, speculation, prediction and so on. In general, Democrats were worried, saying tax cuts that were part of the plan would starve the state. Republicans were confident, saying they’d meet the budget.

The target – the amount lawmakers said would come in (that is to say, The Budget) – was set at $21 billion for the budget year that began July 1, 2014, and ended on June 30.

And when the final figures landed a few days ago, the state had brought in more – almost $21.5 billion.

The extra $445 million is the surplus, and it’s wrapped up into the talks about what to do next.

Nelson Dollar, a key House budget writer, said of the latest that it’s “a few extra dollars to work with, which is always helpful.”

(In May, officials had first predicted a surplus, pegging it at about $400 million.)

The corporate tax rate will drop as a result of hitting a pre-set target. It’ll be 4 percent in 2016, down from the current 5 percent.

The reason for the surplus, spelled out in a Fiscal Research memo and in a follow-up email to Dome, is from a combination of factors, mostly that incomes were up because more people were working. The economy was better in this period than expected.


▪ Individual income collections were $193 million more than expected.

▪ Corporate income collections (some of this is individuals as certain types of businesses) were $232.5 million above what was expected.

▪ There was little difference in the budget and the result on sales, use, franchise and other tax revenues.

It’s worth noting that the surplus was not a result of tax cuts that then stimulated the economy, according to former state budget director Art Pope and other economists. Pope has said he believes much of the surplus is the result of new withholding schedules that aimed to have the state not issue a bunch of tax refunds in April.

In the end, the final fluctuations reflected as much.

“Corporate income was a bit stronger,” chief economist Barry Boardman wrote in an email to Dome, “but not enough to warrant any revision” from previous memos explaining the surplus.

As Pope and others have noted, the result was that the budget folks missed their prediction by about 2 percent. It was a miss on the good side.

What’s next

In the end, the state’s revenues increased in the past budget year by about 6 percent – and about 20 percent since the depths of the recent recession.

Those numbers remain important as House and Senate negotiators meet and try to make a deal, resolving all sorts of policy and budgeting differences.

In the end, they’ll look and see what type of growth they expect.

The Senate has been aiming to budget for growth of about 2 percent to 3 percent in the coming period, a number that matches closely with inflation plus expected population growth.

The House plan looks to grow the budget by about 5 percent to 6 percent.

Stay tuned.

J. Andrew Curliss

Send tips to dome@newsobserver.com.

GMO votes in U.S. House

The U.S. House of Representatives held a series of votes in late July on the labeling requirements for foods that contain genetically modified organisms, or GMOs.

Voluntary labeling

Voting 275 for and 150 against, the House passed a bill (HR 1599) that would establish a system of voluntary, state-administered labeling requirements for foods that contain GMOs. In addition, the bill pre-empts any existing or future state or local laws that establish mandatory labeling of genetically engineered foods.

At present, there are no federal requirements for GMO labeling.

Dan Newhouse, a Washington Republican, said: “What we need is a national voluntary label, much like organic, a label which gives consumers who want to purchase non-GMO foods the freedom to do so, but that will not impose higher costs on producers or consumers.”

Tulsi Gabbard, a Hawaii Democrat, said the bill “makes a mockery of transparency and leaves U.S. consumers in the dark.”

A yes vote favored a voluntary state-by-state approach to labeling GMO foods.

Voting yes: Democrats Alma Adams and G.K. Butterfield and Republicans Renee Ellmers, Walter Jones, Virginia Foxx, Mark Walker, David Rouzer, Richard Hudson, Robert Pittenger, Patrick McHenry, Mark Meadows and George Holding.

Voting no: Democrat David Price

During the debate, the House defeated an amendment that sought to require mandatory, federally administered labeling of foods containing GMOs. This would have replaced the underlying bill’s voluntary state-level approach. Only Adams supported the amendment to establish a federal mandate.

GMO labeled ‘natural’?

Voting 163 for and 262 against, the House refused to prohibit food labeled as “natural” from containing genetically modified ingredients. The vote affirmed wording in HR 1599 (above) that allows Food and Drug Administration and U.S. Department of Agriculture definitions of “natural” to include GMO foods.

A yes vote was to prohibit foods containing GMOs from being labeled as “natural.” Adams voted yes. All other members of the North Carolina delegation voted no.