Over the past few months, observers have been watching revenue (hard-earned taxpayers’ dollars) collections with much anticipation. April’s revenue collections were significantly lacking and there was concern for the year-end numbers. May, however, showed a complete reversal in this trend, posting record collections. June, the last month of the state’s fiscal year, continued May’s trend. Year-end numbers therefore exceeded all expectations.
The Department of Revenue announced that collections for June were up 7 percent or $110 million more compared to June 2006. For state fiscal year (SFY) 2007, net revenue collections were the largest ever for increasing 7.5 percent or $1.2 billion compared to SFY 06.
Looking at some of the individual categories, YTD individual income tax collections were up 9.4 percent or $759 million compared to SFY06. This is a result of collections from tax returns being up 7.6 percent, estimated tax payments up 12.8 percent and collections from assessments up 9.7 percent. Sales and use tax reported a net increase of 3.6 percent or $204 million.
While positive, this does not meet the governor’s revenue estimate of 4.86 percent growth compared to SFY06. It will be important to note when tax reform initiatives are proposed that sales tax collections were not as high a percentage of the total in FY07 as they were in FY06. (33.8 percent of collections in 2007 were from sales tax compared to 35.1 percent in 2006.
Corporate income tax collections was the surprise category this year. Projections indicated that Georgia would collect fewer dollars than SFY06. For the first six months of the fiscal year, it looked like the extent of this decline was underestimated.
However, the fiscal year ended with collections up 17. 9 percent or $154 million over last year. This is the single largest year (over $1 billion), in terms of collections, for this category.
Another high growth category is motor fuel taxes, which grew 20 percent or $160 million compared to last year. When broken down into its component pieces, the sales portion is up 27.3 percent or $100 million and the excise tax reports an increase of 13.9 percent or $60 million.
Much has been said about the lack of funding for roads and bridges. This surplus over projections will hopefully improve this situation. In total, collections were just shy of $1 billion for the fiscal year.
What does this mean?
Preliminary estimates place our reserves at $1.39 billion or 7.5 percent of collections. SFY08 budgeted $19.2 billion for activities that depend on tax revenue. Those reserves of $1.39 billion would last only 3.7 weeks to fund government services such as education, health care and transportation needs (among others). What is the appropriate level of reserves the state needs? That’s a key question as the legislative and executive branch consider tax rebates and reform in 2008.
• FY08 economic development funding
• Rankings of Georgia compared to other states
Visit the Legislature’s home page at www.legis.state.ga.us
To view the FY08 budget in its entirety:— www.senate.ga.gov - Tab - Budget Reports
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