Friday, July 21, 2017
NOTES FROM THE SENATE, JULY 21, 2017
GEORGIA'S A WINNER BY ALMOST ANY COMPARISON
June 30 marked the end of the 2017 Fiscal Year and Georgia's revenues, buoyed by a growing economy, ended an outstanding year...and the more you compare to other states and the problems they are experiencing, the more you can appreciate how well Georgia is doing.
But first, June closed out the 12-month fiscal year with growth of 2.6%. Individual Income Taxes grew 3.1% and Corporate Income Taxes grew 8.5%. Net Sales Taxes to the State grew 6.9% and Tobacco and Alcoholic Beverages Taxes were both positive at 3.0% and 4.4% respectively. The Title Ad Valorem Tax category was negative at -13.7%.
Motor Fuel Taxes were up slightly at 0.9%, Impact Fees were negative at -$738,000 and Hotel/Motel Fees were up 4.1%. Altogether Fuel Taxes/Fees were up $1.1 million.
FISCAL YEAR REVENUES STRONG - ABOVE BUDGET
The 12-month 2017 Fiscal Year ended with some strong numbers in revenues that point to an economy that is growing even in the midst of other states suffering revenue woes. Total Revenues were $21.7 billion, with a 4.5% increase totaling $930.5 million.
Individual Income Taxes were up 5.2% for the Fiscal Year as Corporate Income Taxes were slightly negative at -0.9%. Net Sales Taxes were up 4.6% and Title Ad Valorem Taxes increased 4.3% or $40.4 million. Tobacco and Alcoholic Beverages were up slightly at 0.4% and 1.6% respectively.
Motor Fuel Excise Taxes were up 5.2% for the year, increasing $85.9 million. Impact Fees were up 4.7% and Hotel/Motel Fees increased 14.1% or $21.1 million. Altogether, new funds for Transportation increased $107.8 million. That's about 11.5% of the State's total Revenue Increase for the year or about 6 tenths of one percent of the 4.5% overall increase.
GEORGIA THRIVES WHILE MANY STATES STRUGGLE
It has become national news that a number of states struggled to balance and pass budgets this year due to slippage in state revenues. As of a couple of weeks ago, reports showed seven states still operating in the new fiscal year without a budget: Connecticut, Rhode Island, Wisconsin, Massachusetts, Pennsylvania and Oregon with others including New Jersey and Illinois, going into July before passing a budget. Florida, Mississippi, Louisiana and South Carolina all passed budgets by calling for a special session to complete budgets at that time. North Carolina overrode the Governor's veto in order to complete a budget amid projections of budget shortfalls in FY19.
What legislatures and governors have been at odds about is crafting a budget in the face of declining revenue and projections. Earlier this summer, a National Conference of State Legislatures' survey showed some 23 states were making over $5 billion in budget reductions from already passed budgets. This is happening at the same time Georgia was adding to its FY 2017 budget in its amended version. States dependent on the oil industry have been particularly hard hit with the continued decline in the price of oil and resulting reduction in drilling.
GEORGIA'S BUDGET - PASSED ON TIME AND BALANCED
Georgia offers a drastic comparison to many states. The Legislature passed the FY18 Budget that began July 1, back in March, a week before the 2017 Session adjourned and with little fanfare. The House passed the Budget 172-1 and the Senate passed it 52-0. When the Governor signed the 2018 budget, he had NO vetoes.
Not only did Georgia not experience a budget revenue shortfall, it appears that FY17 revenues exceeded the amount budgeted by some $263 million. Those funds along with any lapsed funds by departments will go into the state's "Rainy Day" Fund, or RSR. The state's reserves are probably reaching close to $2.5 Billion dollars.
DARE TO COMPARE - US VS. THEM
We utilize a 12-month trailing average to keep up with how our state's revenues are trending, but at the end of the fiscal year, it is all the same. As we compare Georgia's numbers with other states, in some cases, we do not have the last month of the fiscal year due to a delay in those states releasing the data, but the most recent 12-month average is indicative of where they will be with the final month or two added in. So, here is how Georgia stacks up with a number of our competing Southeastern states:
Georgia - 4.5% Growth
Texas - 12-Month total revenue - down $7 billion
Alabama - 12-Month Trailing Average through June - up 2.2%
Mississippi - 12-Month Trailing Average through June - down -0.4%
Louisiana - Beginning to recover from drop in revenue previously due to oil price decline - 12-Month Trailing Average - up 16.7%. Has a 1% sales tax expiring.
Kentucky - 12-Month Trailing Average through June - up 1.4%
North Carolina - 12-Month Trailing Average through May - up 2.6%
Florida - 12-Month Trailing Average through May - up 4.0%
South Carolina - 12-Month Trailing Average through May - up 3.2%
Tennessee - 12-Month Trailing Average through May - up 4.0%
IT AIN'T BRAGGIN IF IT'S TRUE!
So here are some positives that demonstrate how well our state is doing and for which we should be proud:
Governor and Legislature produced a balanced budget on time and without a fight
State maintained its AAA Rating with all three bond raters.
Revenue Shortfall Reserve exceeding $2 billion
Economic Development projects through 11 months of calendar year 2017 total 171 projects creating 9,353 jobs investing $2.05 billion.
Georgia Ports posting a record year and Atlanta Airport maintaining "busiest" status
New Transportation funds from Excise Tax change and fees investing $785 million in transportation projects around the state.
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.