After an off year, the state of Georgia’s revenue — particularly sales tax collections — are rebounding a bit.
Overall collections were up in July by 2.7% over July 2023, a second monthly improvement in a row after revenue tanked for most of fiscal 2024.
The state closed the fiscal year — which ended June 30 — down, but officials are still expecting a massive surplus because the results were better than expected.
Gross sales tax collections were up 4.5% in July, the corporate income tax take was up 28.4% and individual income taxes were down slightly in comparison with July 2023. Most of the state’s revenue to help pay for K-12 schools, colleges, public health care, prisons, policing, roads and other services comes from income and sales tax collections.
Two consecutive solid months doesn’t assure the trend will continue, but it’s a positive sign given that state officials were predicting a fairly slow 2024.
Gov. Brian Kemp, a Republican, has relentlessly attacked Democratic President Joe Biden’s handling of the national economy this election season, blaming him for the highest U.S. inflation rate in 2022 since the early 1980s. At the same time, Kemp has touted Georgia’s economic success.
Collections were down 0.5% in fiscal 2024. Kemp, however, assumed revenue would drop closer to 7%, which limited how much lawmakers could appropriate during the 2024 session. The difference will leave the state with billions of dollars in surplus funds.
Legally, lawmakers can only appropriate what the governor estimates each January that the state will take in during the coming year. If he estimates, for instance, $30 billion will be raised from income, sales and other taxes, that is what lawmakers can appropriate to spend. If $35 billion comes in? Instant surplus.
That has been the case for the past three fiscal years, and it will be again for fiscal 2024, although the final surplus numbers won’t be out until September or October.
At the beginning of the year, the state had $16 billion in rainy day and “undesignated reserves,” enough to run state government for nearly half a year without any other money. Georgia isn’t alone. The huge federal windfall sent to Americans and local governments, combined with the economic boost that came after the brief COVID-19 shutdown, produced fat state coffers across the country.
The state spent about $26.6 billion — excluding federal funding — in fiscal 2020, the last budget plan the General Assembly approved before the COVID-19 pandemic hit. Last year, it was more than $32 billion, and the recent midyear budget — which ran through June 30 — was almost $38 billion.
For the fiscal year that began July 1, Kemp is projecting a 1.7% rate of growth — much lower than the state, on average, sees.
Part of the reason is the state lowered the income tax rate — a much celebrated decision that will mean a smaller tax bill for many and possibly less money for the government.
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