Budget hole projected if $1 billion tax-cut plan passes NC legislature
RALEIGH -- The state Senate’s proposal to cut $1 billion in taxes over the next two years will lead to budget shortfalls starting in the 2018-19 fiscal year, according to an analysis produced by the General Assembly’s Fiscal Research Division.
By the budget year that starts on July 1, 2021, there would be a $598.9 million gap between tax revenue and budget demands, assuming school enrollments and other similar factors hold steady, according to the projections.
“The problem with those projections is they’re going to be based on past growth,” Sen. Jerry Tillman, a Randolph County Republican, said Monday night. He had not seen the specific estimate predicting the impacts from Senate Bill 325 – which supporters have labeled the Billion Dollar Middle Class Tax Cut bill – but said such projections don’t account for the economic boons that are courted by tax cuts. “Tax cuts spur more growth. They certainly have in the last six years.”
Still, the document will fuel the three-way debate over how to cut taxes this year between Republican leaders in the House and Senate and Democratic Gov. Roy Cooper. Each of the three plans puts a chunk of money aside for savings while handing back some of the surplus through tax cuts. But the Senate plan is by far the most generous to taxpayers, and costly for state coffers.
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