Only a few days before Gov. Brian Kemp is scheduled to release his budget proposals to lawmakers, the state reported that tax collections that will pay for that spending were off 5% in December.
For the first six months of the fiscal year, which began July 1, collections are up 1.6%. Had the state been collecting gas taxes during the first half of the previous year — Kemp had suspended them to reduce the cost of fuel — revenue would have been down 2.5% during the comparable months.
Collections were slow for most of 2023 after three years of skyrocketing growth.
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 a host of other services.
In December, the individual income tax take was off 3.6% while sales tax collections were up 2.8%. The two taxes provide more than half of all state revenue.
Kemp warned lawmakers at the end of the 2023 session about a likely downturn in the economy, and his economist projected a slowdown in 2024.
Still, the governor is expected to call for new spending later this week when he releases his budget proposals for the coming year, including pay raises and funding in key areas.
He is able to do so because 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.
Kemp told state agencies in August that they could request up to 3% worth of enhancements to their budgets in the coming year, a break from the past, when governors were reluctant to suggest spending boosts.
And in December, Kemp announced he’d push legislation during the 2024 General Assembly session to speed up cuts in state income tax rates and he handed out $1,000 retention bonuses to more than 300,000 teachers, school workers and state agency staffers.
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