The purpose of the North Carolina Budget, Tax, and Economic Highlights guide is to equip the legislator, as well as the layman, with updated data to better understand state fiscal policy issues and economic trends in North Carolina.
Toward this end, this guide features four sections, highlighting taxes, the state budget, state debt and unfunded liabilities, and state economic data. This guide is chock full of useful data, informative historic trends, and answers to important questions about North Carolina fiscal policy and economic trends.
At $30 billion per year, the stakes for the state’s General Fund budget have never been higher. Adding in spending financed through various receipts, primarily federal funds, along with transportation spending, the true total state budget comes to around $65 billion. All told, total state spending amounts to just over $6,100 per person, or nearly $25,000 per family of four.
As for taxes, North Carolina for decades had been a high-tax state in a low-tax region. Prior to the historic reforms in 2013, North Carolina imposed the highest top personal income tax rate in the Southeast, and among the top ten such rates in the nation. The 2013 tax cuts, followed by subsequent reductions, dropped our state’s personal income tax rate to second lowest in the region – behind only Tennessee who has no personal income tax.
This book also highlights how state debt has changed over the years. After ballooning from $2.8 billion in 2001 to $6.5 billion in 2012, General Fund supported debt fell back down to $3.9 billion by 2021. Conservative leadership wisely retired 40 percent of state debt in less than a decade.
Unfortunately, unfunded liabilities still remain a significant budgetary concern. The state employee pension fund faces a $14.8 billion liability, while health benefits for state retirees have accumulated nearly $24 billion in promised benefits.
Finally, North Carolina boasts the 11th largest state economy in the country, with a diverse workforce ranging from hog farmers to bioscience. Our economy has enjoyed strong growth since tax reforms and conservative fiscal policy became the norm in Raleigh a decade ago. Data from recent years are skewed due to the Covid-19 lockdowns, but North Carolina has recovered well and has positioned itself on sound fiscal footing in advance of the next economic recession.
North Carolina’s budget, tax, and economic history is filled with twists and turns, but we have much to celebrate. The Tar Heel State is a leader in many ways. With constant, honest attention to our fiscal situation, we can continue to lead for years to come.
