Consensus Budget Forecast Shows More Tax Revenue Than Expected
The Consensus Revenue forecast issued its updated revenue forecast for the North Carolina state government.
Here are some highlights:
General Fund revenues for FY 2026-27 are revised up by $713M (2.1%) from the March 2026 consensus, which is $1.66B (4.9%) higher than certified revenues.
A stronger outlook for individual income tax collections, which the CFG now expects to come in $463M (2.8%) higher than in the March 2026 consensus, accounts for two-thirds of the increase.
Higher anticipated corporate income and franchise tax collections account for $148M (7.0%) of the FY 2026-27 upward revision, reflecting a stronger baseline for business profits and corporate net worth than the March 2026 consensus. The CFG also raised expectations for insurance premium tax collections by $91M (5.7%) for FY 2026-27.
Sales tax revenues see a modest upward revision, reflecting slightly higher inflation, though rising prices and a waning boost from this year’s higher federal refunds may limit consumer spending later in the year.
The increase in tax revenue is due to a better-than-expected economy. AI-related investments, strong stock market performances, and robust corporate profits were highlighted as key drivers of the increase tax revenue. The report raised concerns about energy prices and financial market volatility.
In response to the increased tax revenue, Republican Senate Leader Phil Berger said, “For years, we’ve seen these revenue forecasts significantly underestimate our state’s economic outlook. North Carolina’s economy is strong, and we continue to bring in substantial revenue surpluses thanks to Republican-led tax and budget policies. Our formula of low taxes, responsible spending, and reasonable regulations has led to one of the most prosperous decades in our state’s history.”
Democrat Governor Josh Stein said, “With the strong stock market, revenues have exceeded our forecast. That is good news, but we can’t stake our future on stock market volatility. We need to make fiscally responsible decisions and continue to invest in what makes our state so strong: our people.”
There was no immediate response from N.C. Republicans at the time of publication. This is the revenue forecast General Assembly budget writers will use as the work to craft the updated budget for the short session.
