Georgia sales tax numbers lower than expected

New state sales tax collection figures show Georgia consumers continue to cut their spending — and experts and state officials worry the state’s economy hasn’t yet hit bottom.

“When you’re looking for these trend changes, you’re looking for a light at any point,” Gov. Sonny Perdue told reporters Friday. “So far we haven’t seen that light.”

The sales tax numbers, released Friday, show Georgians continue to hold off on dining out and buying everything from cars to furniture to clothes.

That’s left Perdue and state officials wondering if the $1.6 billion they are trying to cut from the state budget this year will be enough.

In the past decade, Georgia has relied on growth from real estate, tourism and domestic and global trade. But the burst of the housing bubble crippled residential construction; the mortgage and credit crises damaged the financial sector; and a pullback in consumer spending has threatened some tourism.

Health care and education have continued to grow. And Georgia exports, which had surged as the dollar fell and cut prices of American-made items, have weakened in recent months as foreign economies have weakened.

“We’re nowhere near the bottom in terms of the economy,” University of Georgia economist Jeffrey Humphreys said.

With state government helping to educate 2 million Georgians, providing health care to about 1.5 million people, building roads and running parks, further spending cuts could be felt by early next year when lawmakers approve a slimmer mid-year budget.

Perdue remains hopeful that the economy will improve by then. But Humphreys isn’t expecting an uptick until the second quarter of 2009, probably after lawmakers have adjourned their annual General Assembly session.

New jobless claims in August took the largest one-year leap since the fall of 2001. And the pool of laid-off workers has been steadily growing since hiring has not kept pace.

The state lost 46,600 jobs between June and July, with metro Atlanta — more than half the state’s economy— accounting for more than half the losses, according to the state Department of Labor.

The official jobless rate has climbed from 4.4 percent to 6.2 percent.

State tax collections for August didn’t provide much in the way of good news.

Overall collections were off 7 percent, or $94 million, from August 2007. For the first two months of the fiscal year, they are down 6.8 percent. The current, slimmer state budget for this year is predicated on a 0.9 percent decline.

Two key indicators of the economy, income and sales tax collections, were off 6.6 percent and 11.6 percent, respectively, in August.

State gas tax collections were off 13.1 percent from August 2007. High prices mean Georgians are buying less fuel — 20 million gallons less last month compared to a year ago.

Perdue told reporters he will continue to hold onto the $428 million the state had earmarked for property tax relief grants. The governor said the state can’t afford to send the grants to counties to hold down property taxes. Lawmakers have been working to come up with a plan to save the tax grants.

However, on Friday, Perdue said he wants cities, counties and school districts “to make plans to do without this.

“I just don’t believe in good conscience that we can say we are out of the woods at this time,” he said.

Senate Appropriations Chairman Jack Hill (R-Reidsville), runs a grocery store in South Georgia and he remains fairly optimistic about both the economy and state budget projections.

“I think there are more positives than negatives, but we’ve got to find the bottom before we head up,” he said. “I don’t think anyone can tell if we’ve hit that point.”