Rising state revenue helped North Carolina budget negotiations

State economists are now forecasting that North Carolina will raise $35.7 billion in general fund revenues this fiscal year — roughly $600 million more than it forecasted earlier this year.

Why it matters: That upward revision may have made it easier for Republicans in the General Assembly to reach a major breakthrough on the state budget.

• The N.C. House and N.C. Senate had been at odds over how aggressively to cut taxes, with the House wanting to keep current tax rates because of uncertain economic forecasts for the state.

Zoom in: Economists with the Office of State Budget and Management and Fiscal Research Division said the upward revision was primarily driven by the realization of stock market gains and robust corporate profits.

What they're saying: "We think that we're probably about to get an upgrade in the predicted recurring revenues in a few days," Hall said last week of this forecast. "I think we had enough information [now] to look at that [tax] policy and see how it needed to change."

The other side: State economists warned that falling stock prices could hurt state revenues, given how big of a driver it has been for North Carolina tax revenue.

• Still, it revised next year's revenue forecast to $35.4 billion — which is less than this fiscal year, but still over $700 million more than the previous forecast.
• Gov. Josh Stein warned the state needs to be careful with its planning.
• "[W]e can't stake our future on stock market volatility," he wrote in a statement. "We need to make fiscally responsible decisions and continue to invest in what makes our state so strong: our people."