Former budget analyst: NC is heading off a fiscal cliff unless lawmakers shift course | Opinion

When I worked analyzing budgets for the North Carolina General Assembly, I learned that numbers don’t lie. The numbers today are flashing red.

North Carolina is heading toward a structural budget deficit — and fast. Under current law, our state is set to eliminate the corporate income tax by 2030 and slash the individual income tax rate from 4.25% to 2.49% by 2029. According to the Office of State Budget and Management, that plan will create a budget hole of $823 million in fiscal year 2026–27, ballooning to $2.9 billion by FY 2028–29.

As someone who spent 31 years as a fiscal analyst for the General Assembly, I know how important it is to ground budget decisions in long-term thinking — not just short-term politics. The facts speak for themselves.

Shrinking the pie while needs grow

In fiscal year 2023–24, individual and corporate income taxes made up nearly 57% of the state’s general fund revenue. Eliminating or drastically reducing these funding sources will leave us far less able to meet both today’s challenges and tomorrow’s emergencies — from natural disasters to economic downturns to federal budget shifts.

We don’t have to imagine what those unmet needs look like. They’re already here.

Our public schools are underfunded. North Carolina ranked 43rd in the nation for average teacher pay last year. Meanwhile, the Department of Public Instruction estimates $13 billion in capital needs over the next five years alone.

State retirees are falling behind. Teachers and state employees in the retirement system used to receive annual cost-of-living adjustments. Since 2008, they’ve received just three 1% increases — while the Consumer Price Index has risen by 38.5%. For comparison, Social Security recipients saw 36.8% in accumulated cost of living adjustments during that same period.

Water infrastructure is deteriorating. The North Carolina Department of Environmental Quality projects a need for $15 billion in drinking water upgrades and $11 billion for clean water systems in the next 20 years.

Affordable housing is vanishing. From 2024 to 2029, the state faces a projected 764,000-unit housing gap. Nearly 90,000 low-income renters already face long waiting lists for housing assistance.

Our population is aging and expanding. By 2030, North Carolina’s population will hit 11.7 million — with 2.4 million over age 65. That will stretch demand for health care, housing and other essential services even further.

Future crises demand preparation — not cuts

We also need to plan for the unexpected. If these tax cuts move forward, we’ll be walking into future crises with fewer tools in hand.

Climate disasters are increasing. The National Oceanic and Atmospheric Administration reports that North Carolina has experienced 121 billion-dollar weather events since 1980 — nearly three per year. Recovery from Hurricane Helene alone is expected to cost $59.6 billion. With federal FEMA funding potentially shrinking, we’ll need more state dollars, not fewer.

Recessions are inevitable. There have been six economic recessions since 1980. During the Great Recession, our unemployment rate peaked at 10.9% in 2010, severely impacting state revenues. We must be prepared for the next downturn.

Federal funding is at risk. North Carolina relies on $36.2 billion in federal support, which makes up 28% of total state revenue. Proposed federal cuts to programs like Medicaid and SNAP could shift at least $584 million in costs to our state — and to the very families already living on the edge.

We can’t afford to gut the budget

North Carolina lawmakers still have time to choose a better path. Delaying or repealing these tax cuts isn’t just about balancing a spreadsheet — it’s about protecting our schools, our infrastructure and our people.

The fiscal decisions we make now will shape North Carolina’s future for decades to come. Let’s make sure we’re building a future we can afford to live in.

This story was originally published May 29, 2025 at 5:00 AM with the headline "Former budget analyst: NC is heading off a fiscal cliff unless lawmakers shift course | Opinion."