(The Center Square) – Republican income tax cuts saved taxpayers $805 million in the fiscal year that ended June 30, according to the Office of State Budget and Management.
The 4.6% decline in individual income tax collections last year, “due primarily to reductions in the tax rate from 5.25% in 2021 to 4.99% in 2022 and 4.75% in 2023,” came as the total general fund revenue collections increased by $327 million, or 1%, the agency reported Monday.
In total, revenues for fiscal year 2022-23 came to $33.535 billion, which is $3.026 billion, or nearly 10%, higher than the certified budget.
The total is 0.26%, or about $89 million, less than a May 2023 Consensus Forecast prepared by the budget office and the General Assembly’s Fiscal Research Division.
Individual income taxes accounted for $16.762 billion of the total revenues, a figure that came in $1.292 million, or 8.3%, higher than certified revenues, but about $69 million less than the May projections.
Sales and use taxes contributed $10.801 billion, or about $618 more than certified revenues and $30 million above the May forecast. Corporate income and franchise taxes brought in $2.483 billion, or $637 million more than was budgeted.
All other taxes totaled $2.136 billion, or $77 million more than certified revenues and $17 million more than officials expected in May.
Nontax revenues also came in 42% above certified revenues, with $1.352 billion collected in fiscal year 2022-23.
“Nontax revenue was notably higher than anticipated in the prior fiscal year due primarily to higher interest earnings on state reserves,” the budget office wrote. “Total General Fund revenue collections increased $327 million compared to Fiscal Year 2022, with tax collections falling $52 million and nontax revenues increasing $379 million.”
State agencies reverted $1.17 billion in unspent funds, accounting for 4% of general fund appropriations for the year, due mostly to “historically high state employee vacancy and turnover rates as well as prudent budget management by agencies,” the budget office said.
The budget office said the vacancy rate for state agencies has remained above 20%. The rate is currently above 23%.
“Our state employees have demonstrated incredible stewardship and resilience in the face of changing budgetary pressures and unprecedented vacancies,” said State Budget Director Kristin Walker.
The General Assembly continues to have negotiations over a new budget for the fiscal year that started on July 1. It is expected to accelerate further scheduled tax cuts, with legislative leaders signaling the final budget will likely include triggers tied to revenue.
The coming tax cuts are estimated to save taxpayers an additional $1.7 billion to $6.7 billion over the next five years, depending on the final details.
While Republican efforts to reduce taxes are consistently cited by the Tax Foundation and numerous business publications as a primary factor for the state’s economic success, Gov. Roy Cooper has pushed to scale back the cuts. In his budget released in March, the governor proposed to create a tiered income tax system to keep the rate at the current 4.75% for those earning over $200,000 a year.
