October was a mixed bag with overall collections up 2 percent or 3.6 percent excluding dedicated fuel taxes. Positives include individual income taxes which grew at 7.5 percent and corporate income taxes which grew at 19.5 percent.
Negatives include gross sales taxes which were negative at 2.7 percent. This was the first month both categories of fuel taxes were negative, totaling a -20.2 percent.
Year To date July-October
Georgia has collected $5.6 billion in net tax revenues since the state fiscal year began in July. This is an increase of $228 million or 4.2 percent compared to the same period last year. Individual income tax collections for the month grew by $53 million yielding a $151 million or 5.5 percent growth rate for the year to date. This income source represents almost half of the state’s net revenue collections.
YTD sales and use tax collections have declined $15 million or 0.4 percent. Examining various categories revealed mixed indicators. Most sales tax categories continued to indicate a slowdown in purchasing. Discounting utilities collections, which do not rise or fall on consumer buying, only food and general merchandise were positive but only at 4.3 percent and 3.5 percent respectively, a fraction of the growth rate a year ago. Of course, only local governments receive food sales taxes. Negative categories include apparel at -2.1 percent, automotive at -6.4 percent and lumber at -12.3 percent. Manufacturing was negative at -6.1 percent.
The breakaway collections leader continues to be corporate income taxes. YTD collections rose $66 million or 34.1 percent. For the month, the increase was $9 million or 19.5 percent.
Year to date motor fuel taxes have climbed $4 million or 1.2 percent compared to the same period last year.
Where is Georgia heading?
Rajeev Dhawan, director of the Economic Forecasting Center, presented his analysis of the economy to date and for the future. For the current quarter, growth was strong at 3.9 percent. However, that pace will be cut by half for the remaining months of the year and even slower for the first quarter of next year. Dr. Dhawan argued that the real problem is a confidence crisis. Investors are wary because of the record number of foreclosures that are impacting their portfolios. Dr. Dhawan did not indicate that the state was in a recession.
Dr. Dhawan also asserted that the increase in oil prices is a temporary phenomenon. Oil prices are in record territory, but production costs and consumer demand has not been a primary driver of this increase. Dr. Dhawan believes that oil prices will decline in short order.
All in all, Georgia is still faring pretty well compared to many states. There is no doubt that the declining home construction market and the water shortage in North Georgia are negatives that will be felt this fiscal year. The only unknown is the extent of these negative trends.
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