Friday, April 14, 2017
NOTES FROM THE SENATE, APRIL 14, 2017
MARCH REVENUES ONLY SLIGHTLY IMPROVED
March state revenues of $1.566 billion showed a 2.1% growth for the month, motor fuel collections go negative. Motor Fuel excise taxes and fees collections have been adding to the state total monthly and obscuring slow revenue growth this fiscal year. This month, negative excise taxes (-2.0%) and hotel/motel fees (-2.3%) detracted from revenues while Highway Impact Fees increased considerably ($1,504,000).
Individual Income Taxes increased by $123.4 million or 20.2%. Individual Income Tax Refunds were up $32.4 million, 5.8%, but Withholding Payments, a good indicator of economic activity, were up $94.9 million or 8.9%. Individual non-resident payments were up $36 million. The factor of refunds weighs heavy as we enter the April period, traditionally a large collection month for the state. If there is a large backlog of refunds still on hand, that could spell trouble for the remaining period of the fiscal year. If refunds are at a normal level between now and June 30, the state has a good chance to show positive gains for the last quarter.
Corporate income taxes continue to show a sharp drop-off (-$82.8 million) for March. The report from the Governor's Office notes that a revision in IRS rules changed a reporting date from March 15 to April 15, so that could explain the decrease. The April report should be positive if that is responsible for this month's negative showing.
Net Sales and Use taxes of $435.1 million were flat in March (0.0%). Title Ad Valorem taxes were also negative at -2.8%. Tobacco taxes were negative at -15.7% and Alcoholic Beverages were slightly positive at 1.1%.
FUEL COLLECTIONS NEGATIVE
As mentioned earlier, Fuel Tax Collections, for possibly the first month, were negative overall at minus $1,476,000, so months of reflecting overall increases pumped up by fuel tax increases appear to be over. Overall Fuel Collections totaled $147.7 million for the month.
YEAR-TO-DATE NUMBERS SOBERING
With nine months of the fiscal year gone by, the state has only April, May and June left. So far this fiscal year, revenues are up $530.8 million which includes $109.9 million in Fuel Tax and Fees increases. Overall, revenues are up 3.5%, but about 20% of the increase is in Fuel Tax increases and designated to roads and bridges. Individual Income taxes are up only 4.3% YTD, while Corporate taxes are negative at -23.0%. Net Sales Taxes are up at 4.6% YTD, but gross collections show only 2.4% which is a mystery.
Title Ad Valorem Taxes are up 9.0% while Tobacco and Alcoholic Beverages taxes are up 1.2% and 2.2% respectively. Motor Fuel taxes and fees were up 8.3% YTD even with the negative month in March.
While a revenue gain of $530.8 million might sound satisfactory, remember we have budgeted for an increase. As of the three-quarters mark in the fiscal year, the state is only approximately $44 million ahead of budget...
SIGNIFICANT RURAL ECONOMIC DEVELOPMENT LEGISLATION PASSED THIS SESSION
SB 180 - This bill revised the Rural Hospital Tax Credit legislation passed last year and increased the effective state income tax credit from 70% ($5000 per year single or $10,000 filing jointly) of the amount donated to 90% of the amount donated. A corporation also now receives 90% of the donated credit or up to 75% of tax liability in State taxes. The legislation also updated an existing Rural Hospital Grant Program, making the program applicable to counties with up to 45,000 population. The Bill also increased permissible grant amounts to $500,000 for strategic planning and for nontraditional health care delivery to $2.5 million with a cap per hospital of $4 million. Fees for assisting with the Hospital Tax Credit Program were also limited to 3%. The approval for the tax credit can be carried forward to a subsequent tax year.
SB 133 - Creates a $100 million Investment Fund that would be used for capital to invest over 2 years in businesses in Rural Georgia utilizing tax credits and private investment. Would receive a license from USDA as a Rural Business Investment Company or SBA as a Small Business Investment Company. There is a cap on tax credits of $15 million for 2019, 2020, 2021 and 2022. Requires an annual report of Rural Growth Funds showing job creation and retention, average compensation and rural impact.
HB 73 - Provides incentives for the revitalization of Rural Georgia Downtowns. Creates up to 10 revitalization zones per year and a total of 50 altogether.
Rehabilitation expenditures receive a 30% tax credit and can be prorated over 3 years. The Department of Community Affairs will certify eligibility of investors and businesses. Limited to communities of fewer than 15,000. Each job created is worth $2000 in tax credits.
FUNDING AFFECTING RURAL GEORGIA
The Amended FY 2017 Budget has $26.5 million for economic development projects in EDGE or Equity Grants under the OneGeorgia program for rural economic development.
Full transcripts of bills may be found at http://www.legis.ga.gov/en-US/default.aspx . Simply type the bill number into the box at the top left-hand corner of the screen and specify if it is in the House or the Senate. The FY 2018 budget (H.B. 44) may be found at http://www.senate.ga.gov/sbeo/en-US/AppropriationsDocuments.aspx. As always, I welcome any questions you may have.