Cover image of report "North Carolina Budget Report 2022" with Budget & Tax Center logo.
Press Release

NC Budget & Tax Center releases NC Budget Report

A new report from the NC Budget & Tax Center released today assesses the final budget passed in November 2021, ahead of the short legislative session that begins on May 18 and could feature discussion of revisions to the second year of the biennial budget.

Read the Report

The report includes easy-to-read tables of the tax changes in the final budget, as well as lists of what appropriations made it into the budget and what didn’t.

Among the findings of the report:

  • Permanent changes to the tax code in the budget — which include elimination of the corporate income tax and reduction of the personal income tax rate — will result in a 20 percent cut to revenue when fully implemented compared to today’s revenue
  • The budget brings North Carolina to a new low in terms of spending as a share the economy
  • The budget includes unprecedented transfers of funds to reserve accounts, sidelining billions during the COVID-19 crisis
  • The 2021-2023 budget imposes disproportionate harm on Black communities in addition to other communities of color.
  • The budget both hinders women in North Carolina in some ways, but helps in others.
  • The budget falls short for our state’s public employees as well as workers more broadly.

The findings point to clear barriers that North Carolina will face as a result of underinvestment in proven ways to support the well-being and recovery of the people of NC and missed opportunities to addressing systemic barriers to opportunity.

North Carolina had an unprecedented opportunity to drive public dollars to the public good due to a better than expected cash balance and tax collections that were buoyed in part by the federal response to the pandemic and the continued income gains at the very top.

Among the missed opportunities that would have supported better outcomes and a stronger recovery for all in North Carolina were:

  • Inadequate funding for housing affordability during a housing crisis;
  • No Medicaid expansion;
  • Inadequate funding for a sound, basic education in line with the Leandro requirements;
  • No support for North Carolinians working with low incomes

“Between revenue over-collections and billions in federal COVID-19 relief, state lawmakers had both the power and responsibility to enact transformational positive change in our state,” said Suzy Khachaturyan, Senior Policy Analyst at the NC Budget & Tax Center. “Instead, what they did was put billions away in reserves, cut taxes for the wealthy and corporations for the foreseeable future, and put much of the federal dollars where there should have been state funding commitments. The fact that state spending as a share of the economy is at a new low says it all — we should be spending more to take care of North Carolinians during a time of unprecedented hardship, not less.”

In addition, the report finds that the structural imbalance that will result from scheduled deep income tax cuts over the next decade will constrain future lawmakers from responding to community priorities and smoothing the path to recovery in communities — rural, already low-income and historically marginalized from the policy process — hardest hit by the pandemic and downturn.

“North Carolina legislators put forward a budget that creates an uneven playing field for North Carolinians, where out of state corporations get a greater benefit than small businesses and the wealthy get a larger tax break than families with low incomes,” said Alexandra Sirota, Executive Director of the NC Budget & Tax Center. “We shouldn’t be surprised when the recovery takes longer and blocks many communities from progress on well-being and economic security. A clear and consistent commitment to the public good is what will be required, and that means rejecting the constraints the final budget places on future policymakers’ choices about funding.”

For more information, please contact Mel Umbarger, Communications Manager, at [email protected].

How to contact us

We’ve put the contact information for each of our team members on our website at NCBudget.org/our-team/, or you can always email us at [email protected] if you’re not sure who to talk to. You can also follow our blog at NCbudget.org/blog.