Friday, September 15, 2017
NOTES FROM THE SENATE, SEPTEMBER 15, 2017
WILL IRMA AFFECT REVENUES?
Forecasters in The Wall Street Journal's survey of economists expect hurricanes Harvey and Irma to reduce the pace of job gains and spike the unemployment claims from business shutdowns following the hurricanes. Economists also expect that measures of inflation could rise, reflecting the increasing gas prices due to disruptions in oil refineries in the Houston area.
The long run view, however, remains that the initial negative impacts, including business closures and the lack of tax collections for the days and weeks that workers are displaced, will balance out overall by the positive rebuilding. These disruptions also demonstrate the need for a strong State General Fund reserve to continue essential services. The current Revenue Shortfall Reserve stands at over $2 billion, which would provide around a month of funding state operations. Thankfully, the current Irma response will not result in State Revenues being adversely affected, but it is comforting to know Georgia is prepared.
AUGUST REVENUES TURN UP FLAT
Individual Income Taxes slowed this month, decreasing -0.9%, contributing to a month that was essentially flat compared to August of 2016. With a total of $1.68 billion, the month finished down -$3.9 million or -0.2%. Individual Income Tax refunds were down -$23 million while Individual Income Tax Withholding payments were down -$29.4 million.
SALES TAX DIP
Net Sales Taxes slipped, -2.4% for the month. Corporate income taxes were also down -$5.9 million or -28.9%. Title Ad Valorem tax fees were positive at 4.9%. Tobacco tax collections were up 4.7%, but alcoholic beverages were down -0.1%.
FUEL TAXES INCREASE SLIGHTLY
Motor Fuel Taxes were up slightly at 4.5% on revenues of $153.9 million for the month. Highway Impact Fees were down minus -21.8% and Hotel/Motel Fees were down minus -2.7%. Altogether, the transportation related taxes and fees were up a total of $6.0 million for the month.
YEAR-TO-DATE 3.3% GROWTH A GOOD START
The first two months still demonstrate a modest start. The two month revenue total is $3.4 billion or a growth of $109 million over previous receipts last year.
Individual Income Taxes have come in at a very respectable 4.4% rate with corporate tax collections up $7 million for the year or 26.6%.
Net Sales Taxes are showing slight growth at 1.4%. Title Ad Valorem Taxes are down for the year at minus -3.4%, with a loss of nearly $6 million YTD. Tobacco tax collections are positive at 7.7% while Alcoholic Tax collections are down at minus -0.5%.
YTD FUEL TAXES POSITIVE
Motor Fuel Tax collections are up $6.5 million or 2.2% with Impact Fees down -30.6% and Hotel/Motel fees down -0.3% for the two months. Altogether, HB 170 taxes and fees are up $5.8 million year-to-date.
REVENUES EXCEED BUDGET BY $31.2 MILLION
With only two months into FY 2018, Georgia's revenues exceed the budget appropriated by about $31.2 million. The 12 month trailing average shows state revenues are growing at a healthy 4.3% rate.
Other state's 12 month trailing average through August shows slightly slower growth:
Louisiana 12.6% -- slowing as revenues recover to previous levels before major losses
West Virginia 2.4%
States that have only posted through July for a 12 month trailing average include:
North Carolina 2.2%
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.