The General Assembly’s Fiscal Analyst says state revenue from the sales tax and personal income tax increased in September over the same time last year despite double digit unemployment and slow economic growth. Barry Boardman told a panel of legislators the baseline sales tax was up over 12 percent over last year. He said net personal income withholding collections increased by nearly three percent.
“Base revenue means it is comparing year-over-year revenue, stripping out the extra revenue collected last year from the extra penny temporarily added to the sales tax for a fair comparison,” observed Brian Balfour of the Civitas Institute. “Recall that the extra sales tax was allowed to expire, dropping the combined rate for most counties (state and local sales tax) from 7.75% to 6.75% – which works out to be a 12.9 percent reduction in the tax rate.
In other words, reducing the sales tax rate by 13 percent has resulted in a near identical increase in consumption expenditures.”
But Boardman also cautioned the state was still teetering on the edge of another recession and 10 percent unemployment would stay with us for months to come.
“The economy has been improving – just slowly,” said N.C. State University economist Dr. Mike Walden. “Retail sales and aggregate income have risen. Much of the gains have been from enhanced business productivity (more output per input), which is one reason why job growth has been so sluggish.”
Here is an ominous excerpt from Boardman’s report
– In the 2001 recession, it was 19 months after the recession ended
before employment in the State reached pre-recession levels.
– It has been 26 months since the official end of the recession and
according to the latest NC Employment Security Commission
records, as of August 2011, the State employs 297,495 fewer
people than before the start of the recession.
Boardman said the housing recession will continue to be THE major drag on growth and jobs.