Office Of State Budget Management Releases March 2026 Consensus Forecast
Key highlights from the revenue forecast:
The consensus forecast anticipates $35.1 billion in General Fund revenues for the fiscal year, representing an overcollection of $370 million (+1.1%). The upward revision is due to stronger economic growth than the last consensus forecast in May 2025.
The forecast anticipates $34.7 in revenue for the General Fund in fiscal year 2026-2027, an upward revision of 2.8% ($951 million). Year-over-year, this represents a 1% ($360 million) decrease in revenue compared to the consensus FY 2025-2026 forecast.
The report admits that the economic outlook underlying the May 2025 consensus forecast anticipated a modest deceleration in economic growth starting in late 2025. Although job growth slowed, business investment and profits have proved resilient.
The forecast indicates that North Carolina remains on track for income tax reductions. Individual income tax rates fell from 4.25% in 2025 to 3.99% in 2026, and the consensus forecast anticipates revenue collections in both FY 2025-26 and FY 2026-27 will be high enough to trigger two additional 0.5% rate reductions. This will lower the personal income tax rate further to 3.49% in 2027 and then to 2.99% in 2028.
The forecast says that revenues may be higher due to increased stock market profits, but warns that a prolonged conflict with Iran or changes in federal policy may lead to economic changes.
What They Are Saying:
Governor Josh Stein said, “North Carolina has found a recipe for success, but if we fail to act now, we're going to be several ingredients short. Today's forecast means that we will soon fall into a budget gap of at least $2.8 billion, causing the state to have to make painful cuts to critical services like public safety, education, and health care. There is still time to act to keep up North Carolina's positive momentum. As our population rapidly grows and the federal government becomes a less reliable partner, I urge this General Assembly to study these new realities, hit pause on outdated, irresponsible tax triggers, and invest in our most important resource: our people.”
Speaker Destin Hall said, "Today's announcement of a surplus demonstrates the success of the fiscally responsible policies enacted by our Republican majority over the last fifteen years. Unfortunately, this surplus revenue will be entirely consumed by a projected billion-dollar Medicaid rebase. This program must be reformed in order to preserve our ability to fund public safety, education, and other priorities. We must protect North Carolina's hard-earned reputation for fiscal strength by passing a responsible budget sooner rather than later."
Senate Leader Phil Berger said, “Today’s forecast once again confirms that Republican-led pro-growth fiscal policies have transformed North Carolina into an economic juggernaut. As we prepare for the legislative session, this forecast provides a roadmap to continue those efforts and ease the tax burden for hardworking North Carolinians.”
Tim’s Take: Brian Balfour, the Senior Vice President of Research at the John Locke Foundation, helpfully points out that the updated revenue forecast has consistently underestimated tax revenues for the last decade, and the one released this week continued this decade-long trend. The long session was defined by differences between the House and the Senate over doubts about future tax revenue. The data is back, last year’s fiscal forecast underestimated, North Carolina, and President Trump’s economic agenda. If Republicans believe that Trump’s economic agenda will deliver prosperity, they will leave the income tax cuts intact, reducing the tax burden on North Carolina families while empowering businesses with certainty.
