North Carolina Gov. Roy Cooper, here with the members of his Coronavirus Task Force, joined leadership in the General Assembly in support of deferring interest owed on taxes until July 15 to match the new tax filing deadline. | Courtesy Photo
North Carolina Gov. Roy Cooper, here with the members of his Coronavirus Task Force, joined leadership in the General Assembly in support of deferring interest owed on taxes until July 15 to match the new tax filing deadline. | Courtesy Photo
North Carolina’s counties and cities expect their revenue streams from sales and occupancy taxes to drop because of the COVID-19 pandemic.
No sales at non-essential businesses closed to curb the spread of the coronavirus cuts the sales tax revenue they generate.
Issues like these attracted the attention of the Continuity of State Operations Working Group, a subset of the House COVID-19 committee. At a March 31 meeting, the members made it their goal to keep cash flowing and the lights on, lawmakers told the Carolina Journal.
Lawmakers need to be ready to hit the ground running when the General Assembly returns on Tuesday, April 28 for a short session, Speaker of the House Tim Moore (R-Cleveland) said to the Carolina Journal.
State law prohibits lawmakers from virtual votes. Instead, the General Assembly will find other ways to safeguard lawmakers attending the session. The House speaker suggested giving lawmakers more than a few seconds to vote so fewer lawmakers will be on the floor at the same time, the Carolina Journal reported.
The Continuity of State Operations Working Group is just one of the subsets of the COVID-19 committee tasked with developing recommendations. They’ve been directed to address urgent needs relating to health care, economic relief, education and continuity of state operations.
Erin Wynia, chief legislative counsel with the League of Municipalities, told lawmakers that maintaining cash flows is crucial, the Carolina Journal reported.
Sales and occupancy tax revenues account for a large portion of county and municipal budgets, she said.
Thousands of North Carolina residents lost their jobs after the state and counties placed restrictions on businesses to help curb the spread of the pandemic.
An economic working group meeting on March 31 listened to industry insiders who explained the significant impact restrictions put on small businesses.
The Carolina Journal reported Amber Harris, N.C. Association of County Commissioners director of government relations, said the full effect of these changes isn’t known yet.
North Carolina followed the federal government’s lead in extending the tax filing deadline to Wednesday, July 15.
Lawmakers have to act to remove the requirement of paying interest on any taxes owed if they filed after the original Wednesday, April 15 deadline, the Carolina Journal reported.
Gov. Roy Cooper and legislative leaders from both parties issued a joint statement in support of deferring interest on income tax, the Carolina Journal reported.
These delayed tax payments will significantly affect government operations. Approximately $2 billion will shift into the next fiscal year. That revenue loss added to the loss of sales and other income taxes will deplete the state’s unreserved cash balance, Joe Coletti, a senior fellow at the John Locke Foundation, said to the Carolina Journal.
“The governor would need to start reducing state spending immediately to help offset that reduction and the legislature may need to draw money from the Savings Reserve to limit the damage,” Coletti said to the Carolina Journal.
The state will need much of the $2 billion to handle revenue reductions next year, the Carolina Journal reported Coletti said. Portions of these funds could be placed into the Savings Reserve to replace what’s withdrawn this year.
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