Economic Update – March 18, 2015

What’s Up with Local Sales Tax?

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.

Click to Download County Tax History Data

Keith discussed his findings, along with other observations on intergovernmental revenues, during a recent phone interview (see below).

Click Here to Download Municipal Tax History Data

Senate Tax Reform

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, klane@dconc.gov.
Click Here to Download Analysis

 

Legislature Looking at Incentive Changes

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:

JobGROW Program Overview

Economic Development Overview (NC Commerce)

Economic Incentive Analysis (Kenan Institute)

JDIG Job Performance

Speaking of Economic Development

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:

Metro Rents Going Up, Raleigh-Cary 15th Highest

A report this week from the National Association of Realtors showed residential rates in Metropolitan Areas increasing 15% nationwide over the past 5 years, surpassing average income growth of 11% for the same period.

Raleigh ranked 15th highest amongst 70 metro areas studied.

While the NAR report emphasized the importance of increasing housing starts in booming areas in order to ensure housing affordability, especially for younger families, it’s important to note potential changes in housing choices influenced by the desire of the Millenial generation for central city living and avoidance of liabilities and commitments created by home ownership, despite some recent research expressing continuation of traditional housing trends.

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.

CrudeOil 18March2015

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.

EIA Outlook Mar15

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.

GasBuddy18Mar15

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

Feb15Walden

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.”

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