Georgia revenue down $1B in early look before late taxes due
ATLANTA (AP) — Georgia state government preliminarily closed out its 2019-2020 budget year with a more than $1 billion drop in tax collections according to figures released Friday, but the real budget shortfall won't be known for weeks yet as state officials await delayed income tax receipts.
Whatever the budget hole ends up being, Gov. Brian Kemp and lawmakers have agreed it will be filled using the state's rainy day fund, which had $2.8 billion at the beginning of the year. By law, the state can't run a deficit.
The preliminary figure makes it likely that the shortfall will ultimately be less than $1 billion, down from early estimates that ranged as high as $1.5 billion as state tax revenues nosedived during the early stages of the coronavirus pandemic.
Georgia agreed along with the federal government to delay its yearly income tax deadline from April 15 to July 15, meaning a big slice of tax dollars that usually arrives in April hasn't come in yet. Officials say that revenue will be credited to the now-ended budget year, reducing the amount of money the state will have to withdraw from its savings account to make up the shortfall.
So far, the state has collected $22.7 billion in tax revenue for the 2019-2020 budget year, compared to $23.8 billion last year.
In one sign of increased confidence about tax revenues, the Republican Kemp agreed that the GOP-led General Assembly could spend $250 million in rainy day funds in the budget that began July 1. Lawmakers said that increased spending allowed them to avoid state employee layoffs and furloughs, and said they hoped local school districts would be able to avoid laying off or furloughing teachers.
That budget still contains sharp cuts of about 10% for most agencies, though, as lawmakers adopted a plan that projects spending $25.9 billion in state tax dollars, down from $28 billion once expected. The state plans to spend $52.5 billion overall once federal aid, user fees and university tuition is included. That includes $900 million less for aid to K-12 schools.
The June revenue report contains signs of continued trouble for state spending and Georgia's economy. State receipts were $187 million below last year's levels. Of that shortfall, $128 million is from a decline in corporate income taxes, which companies pay based on their profits. The 56% decline from June 2019 suggests Georgia business profits are falling sharply. Personal income taxes were almost flat, but sales taxes and motor fuel taxes both remained down for the month, reflecting an economy running at a lower level than last year.
Incomplete figures for the just-ended year show personal income taxes down 4%, or $473 million, while corporate income taxes were down 23%, or $287 million.
Sales taxes for the year were flat, while motor fuel taxes rose 2%. Taxes on new vehicle sales and registrations fell by nearly $200 million, or about 25%, but some of that decline reflects a cut in the tax rate and other changes.
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