Friday, October 13, 2017
NOTES FROM THE SENATE, OCTOBER 13, 2017
SEPTEMBER REVENUES BACK TO POSITIVE LEVEL
With revenues reaching $2.076 billion for September, the state returned to positive territory with a 3.1% increase. Individual Income Taxes grew 3.6% for the month and net Sales Taxes grew 3%. Corporate Income Taxes were up 8.8% and Title Ad Valorem taxes were down -11.3%. Title and Tag Fees were up slightly at 0.4%.
Motor Fuel Taxes were up 3.9% with Impact Fees negative at -15.7% but Hotel/ Motel Fees were up 3.9%. Altogether, taxes and fees dedicated to transportation were up $6.3 million or 3.82%. Tobacco taxes were negative at -4.5% and alcoholic beverage taxes grew 3.6%.
YEAR TO DATE GAINS ARE POSITIVE
After three months of the FY 2018 Fiscal Year, state revenues have taken in $5.482 billion, showing an increase of $171.4 million ahead of the same three months last year with a percentage growth of 3.2%. Compared to the budget passed this March, the state is $44.6 million ahead in collections to this point.
Individual income taxes are growing at a healthy rate of 4.1% and net sales taxes are up 1.9% after three months. Corporate income taxes are up 11% and Title ad valorem taxes are showing a negative total of -6.2%. Tobacco and Alcoholic beverages tax collections are both up at 3.3% and 0.9% respectively.
Motor fuel taxes are up 2.8%, impact fees are negative -26.6% but Hotel/ Motel fees are positive at 1%. Altogether, taxes and fees going to transportation are up 2.47% for the year so far.
PORT DEEPENING INVESTMENT PAYING OFF
Even though the deepening of the Port of Savannah is ongoing and completion is set for 2020, the aggressive stance taken by the state is already paying dividends through increased traffic of the huge post- Panamax ships that are moving through the expanded and widened Panama Canal.
This shift was reported in an October 9 article in the Wall Street Journal titled, "The Panama Canal's Big Bet Is Paying Off." The article explains how the $5 billion expansion of the Panama Canal has caused a shift in the shipping patterns as the bigger ships are bypassing the Suez Canal and saving at least a day's shipping time going through the Panama Canal.
The huge vessels can carry almost three times the container load of traditional ships and could not pass through the Panama Canal until the widening took place and opened in June of 2016. The WSJ reported that tonnage through the Canal has increased 23% and recently passed the 2000 mark for the number of super large ships previously passing through.
This increased traffic, according to the WSJ, has meant more traffic and the main beneficiary of the increase is east coast ports. The Port of Savannah is showing an increase of 10% and other east coast ports in New York, Baltimore, Charleston and Virginia are benefitting as well. All of those gaining are in the process of deepening harbors to accommodate the larger ships at all tide levels.
The article specifically mentions Shanghai and Korea as saving shipping time and this change meaning more traffic to the ports south of New York. They note time savings of about a week from that part of the world when changing from the Suez Canal to the Panama Canal.
The WSJ article also supports the theory that the east coast ports stand to gain in business faster than the west coast ports because of the ability of infrastructure in southeastern states to reach Middle America from the east coast.
"STATE OF THE PORTS" BIG SHIPS BRING BIG GROWTH
The October 12 "State of the Ports" report given by Georgia Ports Executive Director Griff Lynch substantiated the growth reported in the Wall Street journal, especially as the post- Panamax ships have started calling regularly on the Port of Savannah. Mr. Lynch reports total tonnage growth for FY 17 of 8.3% but 11.6% growth in the second half of the year. This reflects the increased number of containers being brought in by the post- Panamax ships. The containerized increase totaled 12% during the last six month period.
Savannah's port is, in fact, the largest trading partner of the Panama Canal and has had some 20 post- Panamax ships call on the port. Savannah's port is the number one port in the country for the number of ship calls per week. The port handles 8.2% of the total U.S. containerized cargo and 10.5% of the total U.S. containerized exports.
So, the widening of the Panama Canal and the shift in traffic due to the increase in the number of super-size post- Panamax ships, has already paid great dividends for Georgia. The deepening of the Savannah Harbor is preparing this port to take advantage of these opportunities.
One last incredible fact: as the port unloads a huge post- Panamax ship with as many as seven cranes operating at one time, the amazingly efficient port operation can also unload an additional two large ships at the same time, and smaller vessels as well.
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.