NC State Economist Dr. Mike Walden – NC Revenue Rebound
The North Carolina economy went through some very lean economic years during the recession, which had a very adverse impact on state tax revenues. Now that the economy has been improving, have state taxes also gained? N.C. State University economist Mike Walden responds.
“Well, I’ve looked at the relationship between revenues going into the state, state tax revenues and the condition of the North Carolina economy. And there is a very, very tight relationship, as many people want to think.
When we’re in a recession, our revenues go down. When we return to economic growth, our revenues do go up. And in fact, most states go through this pattern. For example, during the worst part of the recession, North Carolina tax revenues were down about 7 percent. That’s actually a very significant amount.
But since the rebound in the North Carolina economy that began in mid-2009, the trend has actually been better. We’ve seen better growth and revenues going to the state general fund. And actually, the latest numbers show that state revenues are back to their pre-recessionary levels. Indeed, that is good news.”