With the lights hung and rolls of wrapping paper filling spare bedrooms across the state, it can be too easy to fall victim to a last-minute flurry of spending. But we aren’t seeing that this year.
According to preliminary numbers, 2022 holiday spending is the most cautious since 2013, as 41% of people say they are spending less than last year.
While American families proceed with caution and batten down their financial hatches, some in the federal government see our taxes as a blank check and every day as Black Friday. The federal government has $24 trillion in outstanding debt held by the public, about 93% of the nation’s gross domestic product and the highest level of debt to GDP since the end of World War II. Holding lawmakers accountable is critical to protecting your hard-earned money from disappearing into the void of governmental mismanagement.
Fortunately, the state of North Carolina is faring far better, after a decade of strategic budget restraint. This year taxpayers will get a break, with the state’s 4.99% personal income tax falling to 4.75% and the corporate tax of 2.50% dropping to 2.25% in 2025 and phasing out completely in 2030.
Still, the spending temptations will be there in 2023, especially as the North Carolina General Assembly, one vote shy of a supermajority in the House, starts state budget negotiations in the next legislative session. Under state law, the legislature writes a two-year budget in odd-numbered years and adjusts it in even-numbered years. The N.C. Constitution requires a balanced state budget.
For Fiscal Year 2023, North Carolina’s state budget is $27.9 billion, an increase of 3.4%, or $921.5 million, over the original spending figure enacted in November 2021. In May, Gov. Roy Cooper proposed increasing spending further, by another $2.3 billion. The three biggest expenditures are health care, education, and pensions.
Even though restraint has dramatically improved since 2012, North Carolina’s spending is still significant. According to usgovernmentspending.com, North Carolina’s budget is the seventh biggest in the nation as a percentage of the state Gross Domestic Product, at 7.98% (N.C.’s GDP is $7.34 billion).
This year, as state lawmakers head back to Raleigh, armed with more seats for Republicans and a 2022 sweep of statewide judicial races, it’s important to keep a close eye on the process and how they manage your tax dollars.