RALEIGH, N.C. (WNCN) – With the state taking in billions of dollars more than expected this year, Republican legislative leaders say they’re considering further tax cuts while Democrats are pitching some specific changes they want to see.
A report last week showed North Carolina will bring in about $6.2 billion more than anticipated in the current two-year budget cycle.
As inflation quickly drives up the cost of living, state Sen. Natalie Murdock said Democrats in the Senate will propose a series of measures, including a temporary suspension of the state’s gas tax.
“We have a budget surplus. We have the additional funding. If this is not a rainy day, I don’t know what is,” she said. “We are in a tsunami. Folks, we hear them loud and clear. They are really, really struggling like never before. Even if you did get a raise, if it wasn’t upwards of 8 or 9 percent, you are not keeping up with the pace of inflation.”
The gas tax is 38.5 cents per gallon. Some other states, including Georgia and Maryland, enacted temporary suspensions of their gas taxes soon after the Russian invasion of Ukraine began.
Gov. Roy Cooper (D) did not propose any tax cuts in his budget plan released last week. The gas tax funds transportation. Cooper’s office says the state would have to ensure those projects have the funding to continue.
“With any tax cut, we would need to make sure the savings were actually passed on to consumers at the pump and not just added to the bottom line of the oil and gas companies,” wrote Jordan Monaghan, a spokesman for Cooper, in an email earlier this year.
Murdock said Senate Democrats also will call for bringing back the back-to-school sales tax holiday, which Republicans eliminated in 2013.
“We are really pushing to provide economic relief to working families and to people, and we all remember that sales tax holiday. I grew up having that sales tax holiday,” said Murdock. “We think that would be a really, really strong way to provide some relief to parents and students this year.”
As part of the budget compromise that passed late last year, Republicans included cuts to the personal and corporate income tax rates that will be phased in over the next several years.
Republican House Speaker Tim Moore said there are discussions underway about further tax cuts during the legislative session that began this week, including a potential rebate, but he didn’t give specifics.
“I don’t want it to look like a gimmick,” he said. “I want to make sure that tax policy that we’re considering is actually something that gives people back their money that’s not needed by the government. At the same time, it’s actually something that will pay dividends down the road.”
He said Republicans are also discussing additional raises for state employees beyond what was already approved for the next fiscal year. He said they’re trying to balance what to do with the surplus with the potential for an economic downturn.
“We don’t know nationally as far as are we going into a recession? Are things going to improve? We don’t know. So, there are some real danger signs out there,” he said.