The state has yet to spend the full $2.4 billion in federal COVID relief money it received last year.

The good final numbers for fiscal 2022 will be welcome news for lawmakers who backed a record midyear budget that included a huge boost in state spending to pay for employee raises, bonuses and increases in virtually every part of the government.

The taxes the state collects help it educate 2 million children, provide health care to more than 2 million Georgians, manage and improve parks, investigate crimes and incarcerate criminals, and regulate insurance firms, utilities and dozens of professions. The state issues driver’s licenses and helps pay for nursing home care for the elderly.

The state is a major provider of treatment for mental health and drug addiction, and it helps fund public health programs that are fighting the COVID-19 pandemic. Besides paying salaries, it helps make sure that hundreds of thousands of former teachers, university staffers and state employees receive pensions and health care.

State income tax collections have been on the rise for the past few years, since shortly after the beginning of the pandemic, when Congress first passed massive federal aid spending. Inflation has helped boost sales tax collections, with goods costing more and the taxes on them also rising.

The revenue increases have continued even though Kemp suspended the motor fuel tax earlier this year to slow the rise in gas prices.

The size of this year’s surplus will depend on what the state has left over after it finishes paying its bills for fiscal 2022. But it’s likely to be another record for the state.

With the help of massive federal COVID-19 aid, the state ended fiscal 2021 with a $3.7 billion surplus. During the 2022 General Assembly session, lawmakers approved refunding about $1.1 billion or so of that to taxpayers. Much of the rest was put into state reserves. Lawmakers also passed a gradual reduction in state income tax rates.

Kemp is expected to support returning at least some of this year’s surplus to Georgians as well.

Stacey Abrams, the Democratic nominee for governor, has said if elected, she will spend some of the fiscal 2022 surplus to give raises to teachers and law enforcement officers and pay for an expansion of Medicaid, the health program for the poor and disabled, to cover more people.

Even with the huge influx in revenue, Senate Appropriations Chairman Blake Tillery, R-Vidalia, said the state will have to be careful about how it spends its money because inflation is driving up the cost of everything from paving roads and policing highways to housing inmates and educating students.

The budget for the fiscal year that just began, for instance, includes nearly $1 billion in pay raises, in some cases large boosts needed to keep state agency employees from quitting because they can earn more working in private industry or for other governments.

But Danny Kanso, senior budget and tax policy analyst for the left-leaning Georgia Budget and Policy Institute, said state spending in general has not kept up with the growing needs in areas such as education and health care. The surplus gives lawmakers the chance to begin rectifying that.

“Georgia leaders must take advantage of this historic opportunity to make long-overdue adjustments to address urgent disparities across health care, public education and economic mobility, along with persistent understaffing and all-time-high employee turnover rates that affect nearly all aspects of state government,” he said.

Georgia tax collections

The state of Georgia ended its fiscal year on June 30. Below are changes in tax collections over the past fiscal year:

Source: Georgia Department of Revenue

* The state suspended the gas tax earlier this year