State revenues across the country are growing at 2.5%, but increasing expenses for schools and health care mean appropriations will grow 3.5% without focused attention on policy and process changes to restrain spending, says National Conference of State Legislatures Executive Director William Pound in the most recent episode of NCSL’s Our American States podcast. Given Gov. Cooper’s desire to increase spending $500 million more than the already budgeted increase, the General Assembly will have little help holding the line in North Carolina.
Past decisions in Raleigh and Washington should provide a little breathing room. Most states will get a boost to their bottom lines this year from federal tax reform as taxpayers recognize income deferred to take advantage of lower rates, fewer federal deductions increase AGI or taxable income, and other effects ripple out. North Carolina is one of 18 states that will not need to find more money to cover the 5% share of costs for Medicaid expansion.