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Positive trends for state revenues

POSTED: April 14, 2014 4:57 p.m.

March is one of the top months for income tax refunds, so revenues can be affected.  But this March, state revenues showed very positive growth coming in at an overall increase of 12.3 percent, increasing $144.4 million on revenues of $1.3 billion. Individual income taxes were up 13 percent as refunds for the month were essentially flat.  The state actually issued more in individual income tax refunds, $527 million, than the net increase in individual income taxes for the month, $477.4 million, but only slightly more, 0.6 percent, than March 2013.

Sales taxes net to the state showed a decrease of 2.4 percent or -$10.4 million. But when combined with the title/tax fee that replaced sales taxes on automobiles, the net combined total shows an increase of collections of sales tax/title fees of 11 percent, a healthy gain. It will be interesting to see how the tag/title fee increase will hold up as the months cycle to the period where the fee was collected last year. These increases are sure to be smaller.

Motor fuel taxes showed a slight increase of 0.8 percent combined. Corporate tax collections continue to show strength with an increase of 22.3 percent or $38.9 million. Tobacco taxes were negative at -2.7 percent, but alcoholic beverages collections were positive at 10.1 percent. As mentioned earlier, tag/title fees continued extremely strong growth, increasing $60.8 million for the month over last year.

Year-to-date numbers are ahead of projections
With just one quarter of fiscal year 2014 left, state revenues continue to show strong growth due in greatest part to the increases brought about by the tag/title automobile tax change. But even without that large increase, revenues are growing pretty well. YTD, the overall growth rate is 5.7 percent on total collections of $13 billion, an increase of $704.8 million.

Individual income taxes continue good increases with a 3.9 percent positive gain YTD. Sales taxes are negative at -$251.2 million, but when combined with title/tag fee, show an increase of 6.9 percent on a total increase of $300.9 million — that’s more than the increase in individual income taxes for the year.

YTD, motor fuel taxes are positive at 4.3 percent, with excise and sales taxes growing at the same approximate rate.  Corporate tax collections have shown very positive growth of 26.8 percent YTD, or $132.8 million, indicating economic gains by businesses. Tobacco and alcoholic beverages are positive at 4.9 percent and 1.5 percent, respectively.

The $13 billion collected through nine months of FY14 puts collections some $295 million ahead of the budget appropriated for this year. What this means is that revenues collected over the budgeted amount will flow to the revenue shortfall reserve (RSR) at the end of the fiscal year in June. If this increase holds up, the RSR would rise to approximately $1 billion for the first time in seven years.  While that is substantial, most state leaders believe the RSR should be something over $2 billion. It is capped at 15 percent of previous year’s net revenues.

So, overall, the state seems to be moving in a very positive direction and the signs of growth in the economy as measured by revenue gains look vibrant and strong at this point.

If you would like additional information regarding a specific piece of legislation, you may access the Georgia General Assembly Web site at http://www.legis.ga.gov/.   The state budget is also online at www.legis.ga.gov, then “Senate” and then select “Budget and Evaluation Office.”

I may be reached at
234 State Capitol, Atlanta, GA 30334
(404) 656-5038 (phone)
(404) 657-7092 (fax)
E-mail at Jack.Hill@senate.ga.gov
Or call toll-free at
1-800-367-3334 day or night
Reidsville office: (912) 557-3811

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