Keith Lane, Senior Budget Analyst in Durham County, shared an updated report on sales tax revenues for all 100 North Carolina counties, showing significant increases for most, along with lower refunds levels.
North Carolina Senate leaders are putting together a plan to redistribute local sales tax revenues. Article 39 revenues, currently distributed on the basis of point of sale (by County) would be distributed instead on the basis of distribution of Statewide population. Initial analysis, as reported by the media, indicate 80 rural counties would see increases in local sales tax revenues, while 20 urban counties would see decreases.
Under a per-capita plan, many higher-poverty, more rural counties such as Greene, Caswell and Jones, would see their sales tax revenues more than double.
Mecklenburg County and its towns and cities would lose about $35 million, a 16 percent drop.
Wake County and its cities and towns would collectively see a drop of about $18 million, or 13 percent, according to the projections by legislative staff.
Raleigh’s share of the loss would be about $8 million, according to documents.
Keith Lane prepared a County-by-County analysis of the impact of the proposed reforms, based on what is known at present about the likely reform plan. Anyone interested in checking the current estimation to ensure validity should contact Keith directly, firstname.lastname@example.org.
Significant discussion has taken place recently about efforts by the McCrory Administration to restore the State’s Historic Preservation Tax Credit and replenish available incentive funds under the revised JobGRO Program (formerly JDIG). NC Commerce officials presented their plan for JOBGro during Tuesday’s Senate Finance Committee meeting, and were met by criticism by some Senators concerned about past distribution of incentives and likely benefits of such a program. Information on these program, and their impact on jobs, are available for download below:
Last week, Golden Leaf Foundation President Dan Gerlach provided an overview of their economic development purposes to the Rocky Mount Area Jaycees. You can view the slide presentation here, or watch it below (Starts at 1:39).
Wells-Fargo March Economic Outlook
Check out their latest discussion broadcast below:
Crude Retreating Again, Outlook Relatively Stable, Gas Prices Slightly Declining
After several weeks of recovery in crude oil and approximately 20% increases in gasoline prices from winter lows, prices are following back down for both commodities. The biggest loser is crude, with April 2015 contract down below $45/bbl.
The EIA Energy Outlook does see crude prices returning to $75/bbl by the end of the year, with gasoline price stabilizing close to the current $2.40-$2.50/gallon nation average.
Statewide averages have fallen again to around $2.30/gallon. This does not appear to be lessening the gap with our neighbors in South Carolina, which are approximately 18 to 20 cents/gallon cheaper.
NC Leading Indicators Downward Since Fall
Dr. Michael Walden’s Index of North Carolina’s Leading Economic Indicators fell 1.7% in January, the fourth of the past six months to see a decline
First-time unemployment claims picked up 12% in January, though they remain nearly 18% below their level a year ago. Building permit activity also decreased 16%, though they remain 4% compared to last January.
“The correct interpretation from these results is that the state economy will continue to expand, but the rate of expansion may soon begin to lag. While certainly not worthy of an “R” (recession) warning, it will be important to note in coming months if improvements begin to taper as the economic recovery reaches its sixth anniversary.”
What motivates you to be a local government budget professional?
NCLGBA events are a great opportunity to enhance professional skills and network with hundreds of your colleagues. Whatever motivates you to slog through budget requests and re-add numbers that don’t add up, twice a year we gather to share, compare notes and learn from each other. And — to welcome new budgeteers!
The NCLGBA board is excited to extend financial support, to go along with that offer of welcome, through the 2015 NCLGBA Conference Scholarship Program. First-time conference attendees — whether current Masters’ of Public Administration or Public Policy students, interns or otherwise new to our field — can apply for a scholarship to join us in education, networking and advocacy. The scholarship provides conference registration and two nights hotel stay to attend the upcoming summer conference July 8-10, 2015 at Shell Island Resort or our winter conference in December 2015.
We ask applicants about their motivation for becoming (or studying to become) a local government budget professional and about how we, as budget professionals, can each impact the community. Please pass along the attached application to the new person in your office, the interns, or MPA/MPP students who may be interested in this scholarship opportunity. Encourage them to participate in the NCLGBA, and to consider what motivates them as they enter our field and share what motivates you.
EDITOR’S NOTE: We were asked not to post the Federal Reserve presentation during the Winter NCLGBA Conference due to a media blackout in advance of presentations made after the first of the year. This update includes more recent outlook reports and analysis from multiple parties, including the Richmond Fed.
While GDP growth in 2015 may revert to its post-recession average of around 2 ¼ percent, there are reasons to believe that growth could rise to between 2 ½ and 3 percent this year.
We have seen pickups at other times during this expansion, only to see them subside, but the recent strength in consumer spending and the decline in the saving rate suggest the current higher growth rate can be sustained. Many labor market indicators also have strengthened.
The economy still faces some challenges, however, including sluggishness in the housing market, potentially weaker exports and declines in government spending.
Inflation is currently below the FOMC’s target of 2 percent but is likely to move closer to 2 percent after energy price movements subside.
The FOMC has no pre-set timetable for raising the federal funds rate target. Policymakers should strive to look through transitory phenomena to assess the appropriate path for interest rates.
For more, watch the video of his comments, watch the video below:
The North Carolina Index of Leading Economic Indicators, published by NC State’s Michael Walden, finished the year with a 1% decline in December, primarily driven by sluggish wage activity. For the year, the state saw growth in construction permits issued and hours worked, along with a sharp decline with unemployment claims. While Dr. Walden does not believe the economic conditions indicate upcoming deceleration, lack of earnings growth may continue to pose a problem with limiting the rate of growth.
January’s revenue report from the General Assembly’s Fiscal Research Division shows current FY 2015 revenues approximately $200 million below budgeted target (-2%). Sales tax (+6.2%) growth and above-target corporate income tax revenue (+$57 million) are helping offset but have not completely made up for loss of personal income tax revenue (-11.3% compared to last year, 2.7% below target). These trends reflect the impact of personal and corporate income tax rate reductions and personal income tax restructuring.
For fiscal year 2015, Fiscal Research predicts continued economic growth, including:
3.2% GDP Growth
3.8% growth in total personal income, 2.6% growth in wages
6.1% growth in retail sales
Last week’s memo from Fiscal Research on revenue projections forceasts total State tax revenues growing $586.4 million (+2.9%) for FY 2015. However, the forecast would still fall 1.3% below budget ($271 million), primarily due to lower-than-projected wage growth. FY 2016 revenue growth is projected at 3.2% ($680 million).
Southern States Outlook
Wells Fargo Economic also took a look at the Southern Region, which also shows widespread economic growth and a positive outlook for the coming year. Here are some highlights:
Most state close to or above 3.9% national wage growth level
3.6% GDP growth in 2014; 4.0% projected in 2015
Oil price decline will have some impact, but stronger diversification will lessen impact and retain potential for growth
Technology continues to be a strong growth sector
Increasing urbanization led by inward migration of younger households (job opportunities, lifestyle, etc.)
New industries, led by aerospace and automobiles, rebuilding manufacturing sector
Traditional industries also seeing improvement (including furniture and textiles); business deals in sector back to pre-recession levels for region
The latest Small Business Optimism Index did fall unexpectedly by 2.7%, a likely indication of early-year uncertainty and continued worry over healthcare and benefit costs. At the same time, 15% of firms indicated plans to hire in the first quarter of 2015, and 25% reported higher compensation to start the new year.
Oil & Gas Price Review
Crude oil prices have rebounded back to above $50/bbl, likely an indication of the impact of reduced supply by some producers, especially the United States. Gasoline prices have also rebounded back to over $2.15/gallon for unleaded in most North Carolina markets. These prices are at least $0.10/gallon more than neighboring states, with South Carolina prices still close to $2.00/gallon or less.