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Budget expectations lowered
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Georgia’s September and first- quarter revenues continued to follow the slowdown of the last nine months and mirror the sluggish recovery of the rest of the country. For September, overall revenues totaled $1.53 billion on an increase of $59.5 million, but almost 30 percent of that increase was brought in not by individual income taxes or sales taxes but by corporate income tax collections.

September is actually a pretty good month overall, usually ranking fifth in the highest revenue-producing months. Being the last month of the quarter and including business filings that occur quarterly may explain September’s traditional strong showing.

But inside the September numbers, the two major categories’ slow growth continues to be troubling. Individual income taxes were up only 1.9 percent and grew just $15.2 million on revenues of $827.1 million. Gross sales taxes for the month grew only 1.4 percent and the state’s net gain was enhanced only by a reduced distribution to local governments.  That adjusted total then showed a 4.2 percent growth in net sales taxes for the state on revenues of $441 million.

Motor fuel tax revenues continued to be affected apparently by the recent increase in prices, with both categories showing a reduction. Motor fuel sales taxes declined 4.3 percent and excise taxes fell 0.9 percent.

Corporate income tax collections continued a strong recovery in September showing a gain of $17 million or a 12.8 percent increase on collections of $150.3 million. This category provided close to one-third of the month’s increase.

Tobacco taxes showed a gain of 3.9 percent but alcoholic beverages were down 21.1 percent for the month. Both categories only total about $30 million monthly.

The other category showing a sizable increase was other fees and taxes, which had an increase of $13.1 million.

Summary on September
If you reduce the gain for the month by the two items not in the two main categories of tax revenue, individual income taxes and sales taxes, and recalculate the percentage of increase, we find that September really only grew less than 2 percent for the month. 

First quarter numbers overall — are appearances deceiving?
September completes the first quarter of the 2013 fiscal year and again, when you look inside the numbers, it is obvious the state has slipped in its recovery since this time a year ago.

Overall revenues are up $175 million on revenues of $4.2 billion for the first quarter, an increase of 4.3 percent. Of course, the state budget passed this past March and begun in July, is based on projected revenues of 5 percent plus. This shortfall, along with other additional shortfalls that must be met in the 2013 amended budget, have been the basis for the 3 percent reductions ordered by the governor for FY13 amended as well as the FY14 general budgets.

Again, inside the revenue numbers, there is little good news. Year-to-date (YTD), individual income taxes are up only 2.7 percent, or $58.4 million, on total collections of $2.2 billion. Individual withholding payments were up in numbers by 2.4 percent, but refunds were also up but only slightly by 1 percent. Other sections of individual taxes were off by some $17.5 million. This category is around 50 percent of state revenues.

YTD sales tax collections also lag overall, gaining less than 1 percent for the quarter, 0.7 percent, or $17.5 million on gross collections of $2.5 billion. The state portion was increased by an adjustment in local sales tax proceeds which results in a gain of 3.5 percent for net state sales tax revenues of $45.8 million on revenues of $1.36 billion.  Sales taxes make up about one-third of state revenues.

Inside sales tax categories, automotive sales at 12.2 percent and construction at 26.5 percent growth seem to lead with home furnishing, manufacturing, miscellaneous services, utilities, motor fuel taxes and wholesale trade all showing a negative quarter.

Motor fuel taxes show negative totals for the quarter with total collections from both sources at -$11.7 million, or -4.6 percent. Both categories were down, sales taxes, -6.9 percent and excise taxes, -1.5 percent.

As mentioned earlier, corporate tax collections’ strength has buoyed this quarter and helped boost overall numbers. Showing an increase of $82.9 million, this category accounted for 47 percent of the first quarter’s gain. Refunds were down by -$56.5 million over a year ago and payments were up $47 million.

Tobacco taxes continue to be negative at -11.7 percent year-to-date and alcoholic beverages down -5.6 percent year-to-date. The other fees and taxes category does not affect the overall total much, showing a gain of $12.2 million.

Chief among the unknowns we face in this year of national elections is the short-term economic recovery of the state and the resulting revenue and budget implications.

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