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Last Tuesday, the governor and the Department of Revenue released the revenue figures for November. On the positive side, the month-to-month comparisons between November of this year and November of last year (FY08) show that revenues were 1.4 percent higher.
In addition, the state has been making up ground over the last three months in terms of its annual revenues. In September, year-to-date (YTD) revenues were 2.61 percent below FY08 actual revenues, in October YTD revenues were 1.98 percent below FY08, and in November YTD revenues were 1.3 percent below FY08 revenues. In the summer budget writers were operating under the assumption that the state would be .9 percent below FY08 (a $1.6 billion deficit in FY09), so actually November revenues suggest that the state is approaching this target.
While this information is encouraging, most state budget writers are concerned that Georgia is not yet feeling the effect of the national economy and are currently discussing a shortfall of $2 billion or more.
Here are the particulars of how revenues performed in November:
Personal income tax collections were 3.8 percent above November 2007 (FY08) collections, which is an increase of $27.3 million. These figures are surprising considering that both Georgia and the U.S. as a whole has seen significant increases in unemployment over the past couple months. This disconnect between unemployment and personal income tax collections suggest that Georgia has not yet seen the full effect of unemployment and economic conditions.
• Year-to-date personal income tax collections for FY09 are down 1.6 percent compared to FY08, which is equal to $58 million.
Sales and use taxes
Compared to November FY08, the sales and use tax collections for the state were only down .5 percent, which is equal to $2.3 million. However, in part this differential is because of a new system of remitting sales taxes to local governments. Earlier in the year, locals were receiving more than the state did in prior year months, now they are receiving less. The figure that more accurately reflects sales and use tax performance is gross sales and use tax collections, which were down $129.8 million, or 14 percent.
• The amount remitted to local governments was down by 27 percent (which is an increase in collections for the state); however, this change is in part due to the Department of Revenue shifting from an estimated remittance to local governments to a system that reflects actual local collections. This change affects the month over month comparisons. Consequently, there should be no large increase or decrease at the end of the fiscal year.
Net YTD sales and use tax collections for the state are actually up 1 percent compared to FY08. However, again, gross collections are down $107.1 million, or 2.4 percent. The amount remitted to locals is down by $113.3 million, or 5.4 percent (which means more is kept by the state).
Overall, most sales and use tax categories are down.
• Food sales, which account for 17 percent of all sales and use taxes collected, were down 12.3 percent year to date.
• Automotive sales, which account for 14.2 percent of sales and use tax collections, were down 5.7 percent year to date.
• Home furnishing and equipment sales, which make up 7 percent of sales and use tax collections, were down by 5.7 percent year to date.
Sales and use tax collections were propped up by three categories.
• Sales in the ambiguous “miscellaneous services” category, which accounts for 10.1 percent of collections, were up 9.4 percent year to date.
• Also up were sales in the equally ambiguous “miscellaneous” category, which accounts for 12.1 percent of collections, and is up by 12.1 percent year to date.
• Utilities sales, which account for 14 percent of sales and use tax collections, were up 11.9 percent.
Motor fuel funds
Motor fuel taxes were down 5.2 percent year to date and -7.4 percent month over month, likely the effect of the metro area gas shortage catching up with us. This is trending downward from last month where the motor fuel revenues were at -4.6 percent year to date. Fuel tax revenues are down $21 million for the first five months.
Time to write a budget
The governor faces a difficult task in preparing an amended FY09 budget and projecting revenues for FY10. We have not seen such uncertainty since 2002-03.