Special to Iredell Free News
RALEIGH — North Carolina ended Fiscal Year 2022-2023 on June 30 with revenues of $33.535 billion.
This is $3.026 billion, or 9.9 percent, above the certified budget for the year. This is $89 million, or 0.26 percent below, the amount of expected overcollections projected in the May 2023 Consensus Forecast prepared by the Office of State Budget and Management and the General Assembly’s Fiscal Research Division.
In addition, state agencies reverted $1.17 billion in unspent budgeted funds. This represents 4 percent of the General Fund appropriations for the year. This is a larger amount than is typical. Much of the reversions were driven by historically high state employee vacancy and turnover rates as well as prudent budget management by agencies.
Contributing factors include:
♦ The vacancy rate for state agencies has remained above 20 percent;
♦ Despite the high vacancy rates, state agencies responsibly managed resources while continuing to deliver services;
♦ The extension of the federal COVID Public Health Emergency allowed the state to continue receiving the enhanced Federal Medical Assistance Percentage (FMAP) for longer than forecasted, leading to lower state spending on Medicaid. The extension and additional federal funding expired April 2023; and
♦ The Department of Public Instruction reverted unexpended one-time reserves for fuel, student enrollment, and a FY 2021-22 shortfall.
“Our state employees have demonstrated incredible stewardship and resilience in the face of changing budgetary pressures and unprecedented vacancies,” said State Budget Director Kristin Walker. “We look forward to working with state agencies in the new biennium to serve our growing state with the most effective state government we can.”
Nontax revenue was notably higher than anticipated in the prior fiscal year due primarily to higher interest earnings on state reserves. While individual income and corporate income and franchise taxes came in over certified budgeted amounts, these both came in below the May 2023 consensus.
Total General Fund revenue collections increased $327 million (1.0%) compared to Fiscal Year 2022, with tax collections falling $52 million and nontax revenues increasing $379 million. Individual income tax collections fell by $805 million (4.6%), due primarily to reductions in the tax rate from 5.25 percent in 2021 to 4.99 percent in 2022 and 4.75 percent in 2023.
According to the National Association of State Budget Officers (NASBO), North Carolina is one of 45 states that ended the recent fiscal year with revenues above the forecasted amount.