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Jan 20

Sales Tax Distribution Report & Advice

Posted on January 20, 2017 at 1:02 PM by Paige Worsham

January 2017
                       November 2016 Collections – January 2017 Distributions
                                                         Linda S. Millsaps



Current estimates are that the NCDOR will distribute $249.1 million in sales tax revenues to our counties and cities. This is $2.51 million less than last month, but almost $28 million more than the same time last year.


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And once again, when Articles 43 and 46 are excluded (as these are not utilized in all 100 counties), the pattern remains essentially the same.

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As we noted last month, state sales and use tax revenues for November were up 11.62% over this time last year. The good news is that, year over year, LOCAL sales tax revenue increases actually exceeded the increases seen at the state level. Local sales tax collections were up statewide 12.6% in November, compared to the previous year. It appears that much of the November increases were driven by Hurricane Matthew recovery related spending.


Outlook for 2017


During the final quarter of 2016 many economists predicted sluggish but steady growth. And perhaps even slower growth in early 2017. This view was driven by:

  • Instability in global leadership, with four of five key western economies replacing their heads of state;
  • Weakness in developing economies;
  • A strong dollar, which lessens our ability to trade;
  • Long awaited interest rate increases; and
  • A belief that the US economic recovery must be near an end, with now 90 straight months of growth.

Others also suggested that student loan debt and income inequality (or the lack of income in the bottom quarter of wage earners) are substantially limiting taxable consumption.

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These factors continue to exist, and are expected to have a continuing impact on the global economy.  For example, Reuter’s worldwide survey of economists, conducted in December 2016, concludes that, “The economic outlook … looks similar to 2016 – uneven and unspectacular.” This, they note, is “despite investor optimism about a breakout for the world economy.” Wells Fargo economists see global GDP growing about 2.2%.


Professor John Connaughton, from the Belk College of Business at UNC Charlotte, sees this as the likely trend for North Carolina as well. He suggests that our Gross State Product (GSP) growth for 2017 will be in the neighborhood of 2.0%. This is only very slightly ahead of the expected 1.9% final GSP growth rate for 2016.


However, there is some belief that regulatory and tax changes driven by Washington could help extend and improve growth nationally for a good part of 2017. Items that could improve near term growth include potential tax reductions, as well as reduced environmental and financial regulatory controls. Repeal of Executive Orders around immigration and student debt affordability could negatively impact the economy. And the repeal and potential replacement of the Affordable Care Act could have both positive and negative impacts on our local economies. Of course any erosion of Social Security payments and Medicare coverage would disproportionately impact rural communities. None of these possibilities are included in the current economic models.

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