Wednesday, September 17, 2008

South Georgia at the State Capitol August revenues forecast challenges for 2009 fiscal year

The Department of Revenue just released revenue figures for August, FY2009. When compared to revenues from the previous fiscal year, the state’s revenues for August are not encouraging.

Total Collections and Month to Month Comparisons
State revenues for August slipped by 7.0% under 2007 figures or $94.159 million less. Total revenues for August were $1.25 billion compared to $1.35 billion in August of 2007.

The state collected approximately $638.9 million dollars in August from individual income taxes compared to $683.9 million in August 2007. This decrease of $45.0 million is equal to a 6.6 percent drop in individual income tax collections.

The figures for sales and use taxes show a similar trend as individual income tax collections. Gross sales and use tax collections were $887.9 million in August FY2009 compared to $901.2 million in August FY2008. The drop in sales tax collections compared to the previous year is $13.3 million, a drop of only 1.5 percent.

Sales Tax Trends
A trend worth noting is that the amount the state distributes to local governments for their portion of sales tax collections has once again increased. In August FY2009, the state distributed $422.1 million to local governments compared to $365.8 million distributed a year ago. So, the state distributed $56.2 million more to local governments than it did last year at a time when state revenues are down.

Motor Fuel Collections
August FY2009 was also a troubling month for motor fuel taxes, with both the sales and excise taxes declining sharply compared to August FY2008. Motor fuel sales tax receipts were down $5.8 million while excise tax receipts were down $5.6 million compared to August FY2008. These are drops of 12.6 percent in the motor fuel sales tax and 13.7 percent in the motor fuel excise tax. Collectively, motor fuel tax collections as a whole are down 13.1 percent. Year-to-Date, fuel tax collections are down 7.0%, which is an additional problem, since the state guarantees that budget level to DOT.

Year-to-Date Comparisons
The year-to-date (YTD) figures for FY2009 paint the same picture as the month to month comparisons. Overall year-to-date revenue collections for FY2009 are approximately $2.5 billion. At this same point in FY2008, the state had collected approximately $2.7 billion. So, as compared to FY2008, the state has collected 6.8 percent less.
For the year to date:

· The state has collected $114.5 million less in income taxes (down 8.9 percent)

· The state has collected $88.0 million less in sales and use taxes (down 8.5 percent)

· The state has collected $11.6 million less in motor fuel taxes (down 7.0 percent)

Inside the Sales Tax Categories
Sales Tax Numbers
The several sales tax categories give clues to the continuing weaknesses in the economy in Georgia.

Year-to-Date (YTD), sales taxes are down 8.5% or $88 million. Food, which makes up 16.8% of sales taxes collected, is down -15.9% YTD, really significant in light of rising prices. The other categories are all negative, ranging from -14.1% for lumber to -3.6% for apparel. One bright spot is that manufacturing sales tax collections are up 0.2%. Utilities sales tax collections are up 18.2%. Distributions to local governments continue to climb, up 10.0% YTD, despite food sales taxes declining. Of course, only local governments receive sales taxes from food sales.

So, we have collected so far $2.45 billion of the $17.4 billion we need in FY2009.

As always, I’d like to thank members of the Senate staff, who contribute regularly to my column. Please contact me in my office at the Capitol with your questions, comments or concerns.

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