234 State Capitol, Atlanta, GA 30334
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Reidsville office: (912) 557-3811
Revenues for the month of October FY09 were $1.387 billion, which is a drop of 0.1 percent compared to October FY08, when the state collected $1.388 billion.
While the slight drop in the month-to-month figures is encouraging considering current economic conditions, caution is warranted. Readers of this column know that the Department of Revenue has made procedural changes that have increased processing efficiency and have therefore reduced the utility of month-to-month comparisons this year.
It is impossible to decipher how much of the money collected is from actual revenue performance and how much is from the new, more efficient processing procedures. Be that as it may, it is still worth noting that:
• Individual income tax revenues were down by $33.2 million, which is a 4.4 percent drop.
• Net sales and use tax revenues were up by $70.3 million, which is an increase of 16.9 percent.
• Corporate income tax revenues were down by $32.7 million, which is a drop of 58.1 percent.
• The prepaid sales tax and the excise tax on motor fuels were down a combined $2.7 million, which is a decrease of 3.4 percent.
Year-to-date revenue performance — troublesome
State agencies have been preparing budget requests based on a revenue shortfall of $1.6 billion, which is equal to a reduction of 0.9 percent from the FY08 budget. Overall, the state’s year-to-date revenues are down by 2 percent, from about $5.603 billion at this time last year to about $5.492 billion this year. If the shortfall holds at 2 percent, then the state would have to cut a $1.85 billion from its amended FY09 budget, up from the $1.6 billion that would have to be cut at the 0.9 percent shortfall.
Given the current state of the national economy and stock market, most economists are expecting the situation to get worse before it gets better. Although there is much uncertainty about where the revenues are headed, some state leaders have started discussing a potential shortfall of $2 billion or greater.
Here are the remaining year to date numbers:
• Individual income tax collections are 3 percent ($85.3 million) short of where they were at this time last year. Through October FY08, the state had collected $2.890 billion in individual income taxes. Through October of this year, the state has only collected $2.805.
• Corporate income tax revenues are 17.8 percent ($46.6 million) below where they were at this time in FY08. The state has only collected $214.6 million this year where it had collected $261.2 million in FY08, not a positive month yet this year.
• Together the sales and excise motor fuel taxes are minus-4.6 percent ($15.4 million) below FY08 collections. At this time last year, the state had collected $331.9 million in motor fuel taxes. At this time, the state has only collected $316.5 million.
• Sales and use taxes are actually up by about $25 million to $1.884 billion, which is 1.3 percent greater than they were at this time last year.
• Year-to-date food, apparel, general merchandise, automotive and home furnishing sales were all down.
Sales tax — inside the numbers
Manufacturing, utilities, miscellaneous sales and miscellaneous services were are all up compared to the previous fiscal year. As noted in a previous column, the Department of Revenue uses a system for classifying sales tax categories that classifies many modern products and services, including computers and Internet service as miscellaneous, so it is difficult to determine exactly what has driven increases in these areas.
Cautious but nervous
So, Georgia has had two decent months in a row, which is good news. But it is difficult to be optimistic as we survey the developing national and state situation.
Move fast to vote before election day
There are three statewide races on the ballot for the runoff election on Dec. 2. Because of the Thanksgiving holidays, the schedule is compressed. No later than Nov. 19, you can request an absentee ballot. Advance voting will last only three days, from Nov. 24-26.