Some conclusions can be drawn from an in-depth look at the year-end state revenue figures, but there are more questions than conclusions in this unusual year.
1. June’s revenues combined with May’s figures provided the entire surplus for the fiscal year and caught up the shortfall the state faced at the end of April.
May increase — $460 million
June increase — $110 million
This increase totaling $570 million was generated in just two months and represents 44 percent of the entire year’s gain. So the question remains: Is there a trend or is the result of e-filing and other factors a huge year-end deluge of tax revenues?
2. Although motor fuel taxes increased $160 million (20 percent) in FY07, the rate of increase steadily dropped the last six months of the fiscal year. So, is this a trend that high fuel prices will eventually drive down usage and in-turn reduce fuel tax growth? This factor should be considered amid calls from some quarters for a special session to reduce gasoline sales taxes.
3. Sales taxes at 33 percent are a smaller percentage of the total state revenues than a year ago when the total was 35.1 percent. The growth of sales taxes at only 3.6 percent (exclusive of fuel taxes) was below the revenue estimate for sales tax receipts but that failure was lost in the overwhelming increase in income tax revenues.
From observing (Yogi Berra said “you can see a lot by observing”) pretty good growth in local sales tax distributions all year (8.7 percent), since local taxes are broader than state sales taxes, (no food sales tax paid to the state) local collections may be less affected by reductions in growth rates of categories such as lumber, apparel and others as is state sales tax totals.
The volatility of the sales tax should not be forgotten when serious tax reform issues begin to be discussed.
4. Month by month, fuel tax growth is obscuring the overall revenue picture and observers should always look at revenues exclusive of fuel taxes.
5. Is there anything to be gained from looking inside the personal income tax figures? Withholding taxes were up 7.6 percent or $576 million, a really important figure. Estimated tax payments were up 12.8 percent or $170 million.
Collections from tax return filings were up 13.9 percent or $86 million.
Collections from assessments were up 9.7 percent or $15 million.
One explanation could have been the explosive population growth in Georgia in the past year pegged at 211,000 people by some accounts. Here’s a WAG (wild — guess), if 50,000 taxpayers (one/fourth of the 200,000) paid state withholding taxes of $500 each, the result is $25 million in tax revenue through withholding taxes. So growth either explains the changes or there is some unknown factor.
6. There is definitely a drop in sales tax collections by category. All categories but one are trending downward.
7. Corporate income tax growth was surprisingly high at 17.9 percent or $154 million. This category produced $1 billion in revenues this year for the first time.
These figures trended down sharply until December but stayed positive for the rest of the fiscal year. With all the corporate tax breaks passed by the General Assembly in the past few years, this sharp increase is extremely interesting.
Visit the Legislature’s home page at www.legis.state.ga.us
To view the FY2008 budget in its entirety:— www.senate.ga.gov - Tab - Budget Reports
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