Georgia’s tax collections remained strong in January as state lawmakers began reviewing a record spending package pushed by Gov. Brian Kemp.
The governor’s office reported Friday that collections were up 16.7% over January 2021 in another sign that the COVID-19 pandemic is not putting a damper on economic activity in the state.
For the first seven months of fiscal 2022, collections are running 17.9% ahead of last year, or $2.7 billion. The increase comes on top of a record fiscal 2021, when the state wound up with a $3.7 billion surplus.
Kemp has called for returning $1.6 billion of that surplus to Georgians via income tax refunds.
Income tax collections were up 21% in January from January 2021, and sales tax collections were up 14.5%. Income and sales taxes make up the majority of state revenue.
The revenue numbers are good news for state lawmakers, who are beginning to consider Kemp’s proposal to increase state spending by $3 billion this year. Kemp’s plan includes pay raises and bonuses for teachers and state and university employees, plus big increases in funding for education and health care.
If his budget proposal is approved by the House and Senate, about 300,000 teachers, school employees, university staffers and state workers will receive bonuses before the end of the fiscal year on June 30.
State and university employees would also receive $5,000 raises, and teachers an extra $2,000 a year, starting in fiscal 2023. Kemp had previously gotten teachers a $3,000 raise, so the extra $2,000 would mean he fulfilled a campaign promise he made in 2018.
Such largesse is common in reelection years for governors, but the big revenue take comes at an especially good time for Kemp because he faces both stiff Republican and Democratic opposition in his bid for reelection this year.
The state’s fiscal economist, Jeffrey Dorfman, told lawmakers last month that he expects a slowing of revenue growth in 2022.
Tax collection numbers have been boosted since mid-2020 by federal aid to Georgians that was approved after the start of the COVID-19 pandemic. That aid for many Georgians continued through 2021.
Dorfman, a University of Georgia economist, told lawmakers that personal income is up 8% from before the COVID-19 pandemic. With massive federal spending, he said, Georgians have saved an extra $75 billion since the start of the pandemic.
Now that most Georgians are no longer receiving direct federal payments, the state will see less revenue because that extra money boosted sales tax collections. That could mean slower growth in the coming year, he said.
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