Monday, August 12, 2019
NOTES FROM THE SENATE, AUGUST 12, 2019
JULY REVENUES STEADY, MAKE BUDGET
Georgia's July revenues came in at a positive 3.1%, gaining $55.7 million for the month over July of 2018. Revenues totaled $1.8 billion and signaled a good start to the new fiscal year.
INDIVIDUAL INCOME TAXES PICK BACK UP
This important category, about half of Georgia's revenues, started out the new year at 8.1%, a very improved number compared to the 4.8% average over the last 12 months. Individual Income Taxes totaled $969.5 million for the month. Corporate Income Taxes were negative at -$31.3 million for the month following several strong gaining months.
SALES TAXES SLIP
Net Sales Taxes for the month totaled $534.8 million, gaining 2.1% over July of last year. Title Ad Valorem Taxes were positive at 6.7% and Tag, Title and Fees category was also positive at 14.7%. Both Tobacco Taxes and Alcoholic Beverages categories were negative this month coming in at -3.5% and -5.4% respectively.
FUEL TAXES NEGATIVE
It seems a while since Georgia has seen a negative month for Motor Fuel Taxes and Fees. Altogether this month, the fuel taxes and fees fell $2.03 million for the month.
So, 3.1% growth is not bad and the $55.7 million gain does meet the budget level for July.
GEORGIA REVENUES AT LOWER END OF SOUTHEAST
Looking back at the FY 2019 Fiscal year that ended in June, it is timely to assess the state's revenue growth relative to the other states in the Southeast to gauge how the state is doing.
For the 12 months ending in June, Georgia's overall revenue growth was 4.8% which sounds pretty good. Within those numbers, Individual Income Taxes are up 4.6% and the other large category, net Sales Taxes are up a healthy 5.3%.
It is only when we examine other states' revenue growth that we realize that Georgia's growth rate is on the low side. Here are comparisons of tax collections for the 12 months ending June 30, 2019:
West Virginia 12%
South Carolina 8.8%
North Carolina 5.3%
Of course the state income tax rate was reduced this past Jan. 1 from 6.0% to 5.75% so withholding taxes were reduced for half the year. One reason Gov. Kemp may be concerned about the volatility of state revenues is the further reduction of the Income Tax Rate to 5.5% Jan. 1, 2020.
COMPARING FY19 TO FY18
A year ago, year-end numbers looked a lot better in an important category. Individual Income Taxes were up 6.1% for FY18 and only 4.6% in FY19. So, there is a reduction of 1.5% in revenue growth rate from last year to this year, a total of $132.9 million less this fiscal year.
Other categories are up or consistent including Sales Taxes where totals for FY19 are up $105.2 million. Corporate Taxes were up tremendously in FY19, $266.9 million.
So, there are reasons to be concerned about the growth of state revenues and one place to address those concerns is to budget very cautiously, which is certainly the approach the Governor is taking.