Georgia tax collections off in February as revenue slump continues

Collections were stagnant for most of 2023 as well after three years of skyrocketing growth fed a growing state budget.

That matters because the money the state collects in taxes helps pay for K-12 schools, colleges, public health care, prisons, policing, business regulation, roads and other services.

In February, individual income tax collections were way off when compared with February 2023. Income tax collections — which were down 19% from the previous February — are the state’s largest source of revenue. Sales tax collections, the second-largest source of revenue, were up 3%.

Last month Kemp signed a record $37.9 billion midyear budget that runs through June 30. It includes $5 billion in new spending, including money for massive renovations on Capitol Hill, a new medical school at the University of Georgia, a new state prison, and miles and miles of roads.

Stagnant or falling tax collections and higher spending normally wouldn’t go together in a state that is mandated to have a balanced budget.

But the state has $16 billion in “rainy day” and undesignated reserves due to the money taken in during the post-COVID-19 shutdown recovery and conservative budgeting.

In October, the The Atlanta Journal-Constitution reported the state had a $5.3 billion surplus in the fiscal year that ended June 30 — the third consecutive massive annual surplus in a row.

Last week the Georgia House passed a slightly less ambitious fiscal 2025 budget that still includes 4% raises for many state workers and more money for law enforcement, education and mental health programs.