Tariffs and Tax Cuts Leave North Carolina on Shaky Financial Footing
The Revised Consensus General Fund Revenue Forecast released by the CFG yesterday should give lawmakers pause. Policies enacted both by the Majority in this General Assembly and by the President of the United States and his Republican majorities in Congress have North Carolina headed toward a precarious financial situation.
The memo from OSBM cites “higher input costs and lower profits from recently implemented tariffs” as a reason for lower-than-expected corporate income tax, as businesses brace for higher costs due to the President’s trade policies. Additionally, sales tax collections were on pace but likely because North Carolinians are stocking up on items before costs rise. Personal income tax forecasts were also revised downward due to the likely impact of tariffs on businesses and the need to cut costs.
Doubling down on additional tax cuts, as the Senate Budget proposes, would leave our state with less revenue to deal with a growing population. With the unprecedented challenge of Hurricane Helene and the need to rebuild Western North Carolina, our state cannot afford to handcuff our ability to fund basic government services. We cannot rely on the federal government to step up and help us, and with dwindling revenue we cannot afford to slash taxes even further.
“I am troubled by the Revised Consensus General Fund Revenue Forecast because it confirms our worst fears about the direction these aggressive tax cuts are taking our state,” House Democratic Leader Robert Reives said. “The House Budget, for all its faults, acknowledged the reality our state is in: We cannot afford to lose more revenue while we have billions of dollars in needs, both in Western North Carolina and across the state. I am prepared to work with anyone who is ready to help arrest this slide toward austerity.”