Georgia ends fiscal year with $1 billion drop in tax collections

Credit: Alyssa Pointer

Credit: Alyssa Pointer

The state of Georgia ended fiscal 2020 last week about $1 billion in the hole as the coronavirus recession held down income and retail sales that produce tax revenue.

The drop in revenue forced state officials to slow spending and use reserves to balance the books. Unlike the federal government, the state can’t run a deficit.

The drop in revenue since mid-March showed the impact of the COVID-19 pandemic, which forced the shutdown of many business and record unemployment.

The state gets most of its money from sales and income taxes, and those were off 1.4% and 3.9% for the fiscal year that ended June 30, according to figures released late Friday.

For June, the final month of the fiscal year, collections were off 8.8% from June 2019.

Liquor taxes remained up, continuing a trend during the pandemic.

Meanwhile, hotel occupancy tax collections were way off, as were  fuel taxes.

Part of the overall decline in collections was by design. The state decided to follow the federal government's lead and move the final income tax filing deadline from April 15 to July 15.

That moved it from fiscal 2020 to fiscal 2021, which started July 1. So state coffers will get a big boost in income tax collections in July, aiding the just-started fiscal year.

That doesn’t, however, mean the state will be floating in rivers of tax money this year.

Gov. Brian Kemp on June 30 signed a 2021 budget that included $2.2 billion in spending cuts, including about $950 million for K-12 education.

Agencies took about a 10% budget cut. It could have been worse - in May, budget writers were expecting agencies to cut 14%, or $3.3 billion.

During the June legislative session, Kemp came back with the lower number and said he would allocate $250 million in reserves as well.

Kemp began the year with about $2.8 billion in the state's "rainy day" reserve

However, he allocated$100 million to fight the pandemic in March. With what was used to fill holes in state spending during the final three months of fiscal 2020 and the allocation for fiscal 2021, nearly half of the reserve will be gone by this time next year.