U.S. Treasury Secretary Steven Mnuchin’s announcement that Americans have an extra three months to file their income taxes amid the coronavirus pandemic is good news for some Georgians, but it could deal a temporary blow to already iffy state finances.
Mnunchin announced Friday that Tax Day would move from April 15 to July 15.
The state’s fiscal year runs from July 1 to June 30. So the decision will move the filing deadline into fiscal 2021, the next fiscal year.
The state collects roughly $2.8 billion worth of income taxes in March and April. At least some of those payments will now likely be delayed with the movement of the filing deadline if the state, as expected, follows the federal government’s lead.
Meanwhile, the state was already facing a potential shortfall this fiscal year as businesses close, Georgians lose jobs and economic activity in general slows dramatically in response to the virus.
“The budget is going to take hits two ways,” said House Speaker David Ralston, R-Blue Ridge. “On the revenue end and the expenditure end. You’re going to see some very, very serious discussions about taking a do-over on the budget.”
Gov. Brian Kemp earlier this week signed a $27.5 billion mid-year budget that was meant to fund state services - from teacher salaries and the state patrol to health care programs working to address the pandemic - through June 30. However, the Atlanta Journal-Constitution reported earlier this week that the virus’ economic impact was already expected to mean the state wouldn’t be able to meet that budget without using state reserves, federal assistance or cutting spending.
Or a combination of all three.
Besides paying for a huge range of services, the state budget at least partially funds the salaries of more than 200,000 Georgians, from teachers and university staffers to prison guards, food safety inspectors, park rangers and criminal investigators.
Income taxes are the top source of revenue for the state, and Georgia collects about 20 percent of its income taxes in March and April.
Rep. Scott Holcomb, D-Atlanta, a member of the Georgia House Appropriations Committee, re-tweeted the announcement of the income tax filing delay, but he said it could be bad news for state finances.
“I agree with the decision to postpone (the filing date), but this is going to be devastating for the state’s budget since the new deadline is in the next fiscal year,” Holcomb told the AJC. “It’s only a matter of time before more money is pulled from the strategic reserves.
“It’s hard to see a path forward without massive federal support.”
In a conference call President Donald Trump held Thursday with governors, Kemp made a case for such federal help.
Ralston said, “The federal government has already delayed until July 15 and we need to take a look at doing the same thing. We may not be the top of the curve yet, and I’m fearful that we’re not. We’re going to have to have a serious look at changing the deadline and pushing it back.”
The state has about $2.6 billion-$2.7 billion in reserves, enough to fund services for about a month without other revenue. Kemp has already committed $100 million worth of reserves to fight the pandemic.
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