RALEIGH, NC (WECT/AP) - Gov. Pat McCrory says North Carolina will have a revenue surplus of $400 million this fiscal year. He announced the surge in tax collections Wednesday at an event held by the North Carolina Association of County Commissioners in Raleigh. But some leading Democrats claim the middle class is not benefiting from the turnaround.
The announced surplus comes three months after government economists projected a $271 million shortfall for the year ending June 30.
State Budget Director Lee Roberts says that forecast was intentionally conservative.
"This surplus is the result of a growing economy, fiscally responsible budget, and tax reform that's putting more money in the pockets of North Carolinians," Governor McCrory said in a news release. "With this revised budget forecast, I'm calling for fiscally responsible investments in savings and reserves, and a new round of investments that will provide services to the people of North Carolina and easing the tax burden on senior citizens and job creators."
According to the release, the governor will propose reinstating the medical expense tax deduction for seniors as well as targeted salary investments in employees that can deliver the greatest positive impact for North Carolina citizens.
The governor will also budget funds to cover debt service payments of the Connect NC bond investments, should the program pass the General Assembly and be approved by voters.
To see the report from the General Assembly's Fiscal Research Division click here: http://bit.ly/1F6h0vM
Gov. McCrory's announcement brought compliments from GOP leaders in the General Assembly.
"Two years ago, when the Republican legislature passed the largest tax cut in state history, Chicken Littles on the left loudly cried North Carolina would lose so much tax revenue that students wouldn't have teachers, roads wouldn't be built and our universities might have to close," Senate leader Phil Berger (R-Rockingham) said in a news release. "But far from starving state government, tax cuts and tax reform have spurred economic growth and job creation – a turnaround that has provided our state with a surplus that will allow us to continue cutting taxes while investing in core priorities like education, infrastructure and public safety."
House Speaker Tim Moore (R-Cleveland) released a statement a few hours after the announcement.
"In five years of Republican leadership, our State has moved from a $2 billion dollar deficit to providing annual increases in educational funding, providing raises for teachers and state employees, and providing tax relief for working families," said Moore's statement. "Our economy is growing. More North Carolinians went to work this morning than at any time in our State's history. We've repaid a $2.7 billion dollar loan and reformed our unemployment system to help our citizens get back to work. Prudent, responsible budgeting has allowed us to invest in critical State services, and we will continue to practice conservative governance. It is under these policies that North Carolina has begun to flourish."
Leading Democrats criticized the governor's announcement.
"Just three weeks ago today, seniors, small businesses and middle class families across North Carolina got slammed on Tax Day – paying more than ever before. With the repeal of the medical expense deduction, the earned income tax credit, and the small business tax credit, the everyday North Carolinian is still struggling to get by, and that is unacceptable," Senate Democratic Leader Dan Blue (R-Wake) said in a news release.
"According to the Governor's report, by 2020, giant, mostly out of state corporations will get $550 million in tax breaks, while wages remain stagnant. Thanks to this Republican tax code, people are making less money, giant corporations are keeping more, and middle class families are paying an enormous price. It is time to put the middle class first. We need to focus on job creation, improving our schools and preparing our children for the workforce – and grow our economy from the middle class out."
"Thanks to Governor McCrory, giant corporations are getting huge tax breaks while middle class families are making less money and are paying higher taxes. Those are the wrong priorities and make it clear to families across North Carolina: Pat McCrory just isn't on your side," said a statement from Patsy Keever, the Chair of the North Carolina Democratic Party.