With 3.1 percent growth in May, Georgia’s state revenues are building toward the end in June of an outstanding year in fiscal year 2015, a year where the state appears poised to lead the Southeast in revenue growth.
May revenues of $1.43 billion for May were strong especially considering the blockbuster month in April revenues approaching $2 billion. Revenues increased $43.2 million over May 2014 with 3.1 percent growth. Individual income taxes continued a strong trend, growing $32 million or 4.7 percent, again following the huge increase in April of 22 percent. Individual income taxes were buoyed by a $9.9 million increase in out-of-state tax return payments and a healthy $34 million increase in tax withholding payments.
Net sales taxes to the state were up 3.3 percent, but motor fuel tax receipts were negative at -6.3 percent. Both excise taxes, by the gallon, and sales taxes were negative, the latter reflecting the $1 per gallon lower price currently being taxed. Of course, this all converts to an excise tax in July.
Corporate income taxes continued a strong showing, growing $22.9 million in May. Tobacco taxes were up 11.2 percent for the month, but alcoholic beverages were down slightly at -1.5 percent. Motor vehicle tag and title fees were negative at -9 percent for May.
Year-to-date revenues outstanding—leading the Southeast
About all you can say about the performance of Georgia’s economy in the 11 months so far of the 2015 fiscal year, is that revenue growth is nothing short of spectacular. So far this fiscal year, Georgia’s revenues total $17.2 billion with an increase over FY14 of $1.09 billion (with a “b”). That’s a fiscal year increase of 6.8 percent and leads every Southeastern state.
Virtually all categories show strong, consistent growth except for motor fuel. Individual income taxes are growing 8.5 percent for the year, a gain of $683.2 million. Net sales taxes are very stable, growing 5.5 percent YTD, or $258.3 million. Motor fuel taxes are flat overall (up .5 percent) showing a negative sales tax number on lower priced fuel over a year ago. Corporate income taxes are robust, growing $64.3 million, or 8.7 percent YTD. Tobacco tax revenues are slightly negative YTD, at -0.4 percent, but alcoholic taxes are positive at 3.7 percent. Title/tag fees are positive for the year, gaining $65.9 million or a 6.7 percent increase.
Georgia leads the Southeast in revenue growth
If you connect economic activity to revenue growth, when no changes have been made to the tax structure, then you have to believe times are improving as revenues grow. That said, there is no doubt that the South’s economy is really moving in the right direction as most states are showing solid growth. The states that have large oil extraction and refining industries have slipped and that shows in their revenue trends, but generally the entire South appears to be growing at a healthy rate.
This makes Georgia’s growth even more impressive. Tracking back 12 months using a trailing 12 months average, you can see trends more readily and that is how the Senate Budget and Evaluation Office surveys other states and compares Georgia’s results.
Georgia’s 12-month trailing average is staying at 7.2 percent, far ahead of the average for other states and a full percentage point or more against the next best states. Through May, North Carolina is at 5.9 percent growth. Alabama comes in at 4.2 percent in the midst of a budget crisis and Louisiana is at 2.5 percent, still suffering from the oil industry price woes. Other states whose numbers are only through April are all under Georgia’s gains.
Georgia—ahead of budget, building reserves
After 11 months of the 2015 fiscal year, Georgia’s revenues exceed the budget this year by some $512.7 million. Funds received in excess of appropriations automatically flow into the RSR, or revenue shortfall reserve, Georgia’s “rainy day fund.” Looks like the total will go over $1 billion for the first time since before the recession hit. At about 5 percent of previous year’s revenues, a $1 billion RSR would run the state around 20 days if some calamity hit. The statutory limit of the RSR is 15 percent, or somewhere close to $2 billion.
Georgia sells $1.2 blllion in bonds, retains AAA rating
This week, Georgia sold over $1.25 billion in bonds, and all three rating firms awarded the state its highest rating, AAA, which the state has held for more than 25 years. Analysts cited Georgia’s conservative fiscal management, replenishment of reserves, moderate debt level and a diversified economy. They noted the state was fully funding its retirement plans and had a history of rapidly amortizing debt.
“It ain’t bragging if it’s true.”
Legislation and final action may be accessed online at: www.legis.ga.gov and the State Budget can be accessed online at the Senate Budget and Evaluation website: www.senate.ga.gov/sbeo/en-US/Home.aspx
I may be reached at
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E-mail at Jack.Hill@senate.ga.gov
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