By State Sen. Greg Goggans
The Governor and the Department of Revenue recently released the revenue figures for November. On the positive side, the month-to-month comparisons between November of this year and November of last year (FY08) show that revenues were 1.4% higher.
In addition, the state has been making up ground over the last three months in terms of its annual revenues. In September, year-to-date (YTD) revenues were -2.61% below FY08 actual revenues, in October YTD revenues were -1.98% below FY08, and in November YTD revenues were -1.3% below FY08 revenues. In the summer budget writers were operating under the assumption that the state would be .9% below FY08 (a $1.6 billion deficit in FY09), so actually November revenues suggest that the state is approaching this target.
While this information is encouraging, most state budget writers are concerned that Georgia is not yet feeling the effect of the national economy and are currently discussing a shortfall of $2 billion or more. Here are the details of how revenues performed in November:
Income Tax
Personal income tax collections were 3.8% above November 2007 (FY08) collections, which is an increase of $27.3 million. These figures are surprising considering that both Georgia and the United States as a whole has seen significant increases in unemployment over the past couple months. This disconnect between unemployment and personal income tax collections suggest that Georgia has not yet seen the full effect of unemployment and economic conditions.
· Year-to-date personal income tax collections for FY09 are down 1.6% compared to FY08, which is equal to $58 million.
Sales and Use Taxes
Compared to November FY08, the sales and use tax collections for the state were only down .5%, which is equal to $2.3 million. However, in part this differential is because of a new system of remitting sales taxes to local governments. Earlier in the year, locals were receiving more than the state did in prior year months, now they are receiving less. The figure that more accurately reflects sales and use tax performance is gross sales and use tax collections, which were down $129.8 million, or 14%.
· The amount remitted to local governments was down by 27% (which is an increase in collections for the state); however, this change is in part due to the Department of Revenue shifting from an estimated remittance to local governments to a system that reflects actual local collections. This change affects the month over month comparisons. Consequently, there should be no large increase or decrease at the end of the fiscal year.
Sales and use tax collections were propped up by three categories.
· Sales in the ambiguous “miscellaneous services” category, which accounts for 10.1% of collections, were up 9.4% year to date.
· Also up were sales in the equally ambiguous “miscellaneous” category, which accounts for 12.1% of collections, and is up by 12.1% year to date.
· Utilities sales, which account for 14% of sales and use tax collections, were up 11.9%.
Time to Write a Budget
The Governor faces a difficult task in preparing an Amended FY2009 Budget and projecting revenues for FY2010. We have not seen such uncertainty since 2002-03. The Legislature will have to make some tough decisions this session once Governor Perdue submits his budget. I look forward to working with the Governor and my colleagues in the Senate to pass a budget that is fiscally responsible and provides Georgians with the most essential and efficient government programs.
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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Sen. Greg Goggans represents the 7th Senate District, which includes Atkinson, Bacon, Berrien, Clinch, Coffee, Echols, Lanier, Pierce and Ware counties and a portion of Cook County.
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