North Carolina ended the 2024 fiscal year on June 30 with revenues of $33.69 billion. This is exceptionally close to the state’s budgeted amount of $33.73 billion, coming in just 0.1% below the certified budget. This is the closest revenue collections have come to the certified budget since the Office of State Budget and Management (OSBM) began tracking this metric 33 years ago.
Fiscal Year 2024’s revenue outcomes stand in contrast to the three prior years in which revenue exceeded budgeted amounts by at least 10%, buoyed by unprecedented federal support for the economy and a rapid recovery from the pandemic, characterized by growing wages, business earnings, and retail sales amid a two-year period of rising prices.
- Sales tax collections were $156 million above budget, but this was offset by individual and corporate income tax collections $155 million below budget (see table below).
- Compared to the previous year (FY 2022-23), revenue collections grew only 0.5% ($158 million).
- Revenue growth was below the long-run average, which is 4.5% over the last 25 years. This low growth was due primarily to income tax reductions, as well as falling inflation on taxable goods.
- Revenues for FY 2023-24 were $220 million (0.6%) below the Revised Consensus General Fund Revenue Forecast issued by OSBM and the North Carolina General Assembly’s Fiscal Research Division on May 10, 2024. The difference is due primarily to lower-than-expected individual income tax non-withholding payments and higher income tax refunds in the second half of May.
- State agency reversions totaled $571 million at the end of the year, which is on par with the state’s long-run reversion average. It is a notable difference from the $1.17 billion in unspent funds that reverted at the end of FY 2022-23.
“This year’s revenues demonstrate our state is returning to an era where revenue surpluses and growing cash balances are no longer to be expected. We foresee sluggish state revenue growth in the coming years. Of particular concern, the current revenue structure means revenues will no longer keep up with population growth and inflation,” said State Budget Director Kristin Walker. She added, “Our state employees have worked diligently to manage their agency budgets effectively, while serving a growing state population and handling unprecedented vacancy and turnover rates in state government.”
Looking Ahead
For the current fiscal year, FY 2024-25, the May Revised Consensus Forecast anticipates $34.16 billion in General Fund revenue collections, which is $471 million (1.4%) higher than actual FY 2023-24 collections. Further reductions the legislature built into state law in the individual income tax rate, a reduction in the corporate income tax rate, and an increase in the transfer of sales tax revenues to the Highway Fund and Highway Trust Fund from 4% to 6% are driving the slower-than-average growth in anticipated FY 2024-25 revenues.
Table: Final FY 2023-24 General Fund Revenue Collections
| Tax | FY24 Actual ($M) | Difference Over Certified Revenues ($M) | Difference Over Certified Revenues (%) | Difference Over May Consensus ($M) | Difference Over May Consensus ($%) |
|---|---|---|---|---|---|
| Individual Income | 16,563 | -21 | -0.1% | -234 | -1.4% |
| Sales and Use | 10,906 | 156 | 1.5% | -23 | -0.2% |
| Corporate Income and Franchise | 2,294 | -135 | -5.5% | 28 | 1.2% |
| All Other Taxes | 2,197 | -45 | -2.0% | -90 | -3.9% |
| Total Tax Revenue | 31,959 | -44 | -0.1% | -319 | -1.0% |
| Total Nontax Revenue | 1,735 | 12 | 0.7% | 99 | 6.0% |
| Total General Fund Revenue | 33,694 | -32 | -0.1% | -220 | -0.6% |
About OSBM
The Office of State Budget and Management (OSBM) is committed to serving North Carolinians by providing objective information and analysis to ensure a balanced budget and effective stewardship of public resources.