RALEIGH (AP) — North Carolina's tax office finally has some good news for lawmakers assembling an austere spending plan following a year of dwindling tax collections.
The Department of Revenue said Wednesday it can bring in an additional $150 million in one-time revenues next year beyond what it had previously expected to generate as it scrutinizes corporate returns.
The amount, while a small percentage of a state spending plan expected to exceed $18 billion, will give budget negotiators some extra assistance at narrow differences between competing House and Senate plans. Some cuts slated could otherwise be restored.
"It's really not as big a help as everybody is trying to make it out," said Rep. Jim Crawford, D-Granville, one of the House's chief negotiators. "That extra money is going to give us a little more money in education, a little more in health and human services, and a little more in corrections."
"That's going to help the slightest bit," added Sen. Linda Garrou, D-Forsyth, a Senate negotiator.
The additional revenues stem from the department's successful effort to collect more taxes from companies that are using complex corporate structures to lower their North Carolina tax bill.
The state Court of Appeals in May upheld a ruling against Walmart Stores Inc., which is seeking a $33 million tax refund. The court agreed the state's revenue secretary has the authority to combine the finances of multiple subsidiaries when determining the discount retailer's tax bill in North Carolina.
Revenue Secretary Kenneth Lay said in a prepared statement that the department "has a number of corporate income tax cases under audit or under review that relate" to last month's court decision. Lay didn't name Walmart, which last week asked the state Supreme Court to review the case.
"The department will be attempting to bring resolution to these cases during the first six months of the new fiscal year," Lay said.
The state's tax office has come through during the recession earlier this decade. Three enforcement efforts designed to get tax scofflaws to pay up generated more than $1 billion from 2001 though the first half of 2005.
Crawford also said Gov. Bev Perdue's budget office has told them they'll have $20 million more in federal stimulus money next year than previously believed for education. That means state funds being replaced by federal money can be used to fill other holes.
The House budget approved earlier this month projected using $413 million in stimulus money for the public schools.
Lawmakers have been meeting off and on since last week, attempting to put together a final spending package that also likely will raise taxes.
The additional money hasn't changed the previously announced directions to negotiators to assemble a tax package that increase revenues by more than $900 million for the year starting July 1 and $1.3 billion the following year.
The state is dealing with what Democrats call a budget gap of more than $4 billion for the coming year. Republican say the gap is much smaller because of the stimulus funds and the previous year's budget baseline is too high.
The Senate approved Tuesday a stopgap spending measure that would keep state government running if negotiators don't finalize a plan and get it signed by Perdue by July 1.
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