July is not a “high” revenue month, not in the category of December, April and some others, but as the first month in the fiscal year, it is important to get the year off to a good start.
I can remember in 2008, when the last six months of the previous fiscal year slid precipitously, how July of that year with its serious drop from the previous year, caused state leaders to withhold virtually all new spending that would have gone into effect as the fiscal year began. That was the last year (until this year) that state employees were voted a pay raise and they lost that because of falling revenues.
So, July came in at a 5.5 percent gain on revenues of $1.48 billion with an increase of $78 million for the month. That’s a good month, since the fiscal year 2015 budget is appropriated based on around a 3 percent increase, so the July increase of $78 million puts the state approximately $34.8 million ahead of budget after one month, based on our projections.
Individual income taxes, 50 percent of state revenues, increased only 2.2 percent or $16.8 million on total collections of $775.2 million. That category only accounted for about 21 percent of the revenue gain for the month. Individual withholding payments were up $30.5 million as individual returns. Estimated payments also increased, but refunds were up $19 million. Non-resident payments were down as well.
Sales taxes net to the state continued to show some growth now that months are compared similarly to months a year ago where the title fee replaced sales taxes on automobiles. Net sales taxes totaled $459 million, gaining $28.9 million or 6.7 percent for the month. Sales taxes grew by 8.3 percent when combined with the tag/title fee for an “effective” sales tax number.
Motor fuel taxes were down for the month, a decrease of 3.4 percent on collections of -5.2 percent and -1.2 percent on motor fuel sales taxes and excise taxes, respectively. Corporate tax revenues were strong in July, totaling a gain of $13.8 million on revenues of $27.8 million.
Tobacco tax collections were down 4.1 percent, but alcoholic beverages totals were up by 6.1 percent. The title/tag fee category showed continued growth, increasing by $13.5 million or 16.2 percent on total fee revenues of $97.1 million.
So overall, the state is off to a good start in FY15 and there are some very positive signs.
Some thoughts on individual income taxes
The individual income tax category consists of: individual withholding payments, individual non-resident tax payments, and some other areas, including returns and estimated payments. Both individuals and small businesses filing as sole proprietors, including sub-chapter S corporations or LLCs, report through this category. So overall, it is indicative of employment activity and profitability of these small businesses.
When individual income taxes came in at 2.4 percent for FY14 at the end of June, it continued a trend that should be of some concern remembering that the category provides 50 percent of state revenues on average. July’s increase of 2.2 percent certainly does not show improvement.
In fact, when we look back 12 months at a “rolling average,” the graph shows a sharp drop overall over a high point of 8.1 percent growth in September roughly a year ago in 2013. That 12-month “rolling average” has now dropped to 1.9 percent growth, which demonstrates the lack of growth in the collection of income taxes.
There are a lot of variables, of course, but it is probably wise to look back at the history of individual income taxes and examine the trends and the underlying reasons.
Next week: We will look at the transportation issues that the special transportation funding commission will be examining and why that is important to the state’s future.
I may be reached at
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(404) 657-7092 (fax)
E-mail at Jack.Hill@senate.ga.gov
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