Outlook for state budgets “gloomy” nationally, not not Georgia



Georgia’s tax collections earlier this year grew at among the fastest rates in the country, according to a new report.

That doesn’t necessarily mean the taxman was more efficient in Georgia than elsewhere. It likely means Georgians had more money to spend, a good sign for the state’s economy.

The same can’t be said for much of the country, particularly in the middle of the U.S., where collections were way off from the same period last year, especially in oil-producing states.

Donald Trump, who campaigned for president promising help to Americans facing financial struggles, won almost all the states in the middle of the country that the report said had lower collections.

While nobody likes paying taxes, fiscal economists say collections can be an indicator of the strength or weakness of the economy. In general, if states haven’t changed tax rates and sales and income tax collections are down, so is the economy. The opposite is also true, which is why the report is good economic news for Georgia.

Nationally, tax collections were off 2.1 percent during the second quarter of the year, according to a new report by the Nelson Rockefeller Institute of Government, the public policy research arm of the State University of New York.

In Georgia, collections were up 5.8 percent during that period, the sixth-fastest growth rate in the U.S.

The report said growth rates weren’t that much better in the third quarter of this year, with preliminary data showing that more than a dozen states saw a drop in sales tax collections. Those states could face big budget holes over the coming months.

“State tax revenue growth is likely to remain slow and highly uncertain throughout the remainder of fiscal year 2017,” the report said. It called the outlook for state budgets nationally “gloomy.”

Part of the revenue growth in Georgia earlier this year came from increased gas taxes approved last year.

But the overall gains haven’t stopped.

Gov. Nathan Deal announced the day before the November election that collections were up 8.6 percent in October. For the fiscal year that began July 1, they are up 4.8 percent.

The tax take fuels the state's nearly $23.7 billion budget, which helps pay to educate more than 2 million students, to supply more than 2 million Georgians with health care, and to fund a host of other things, including the state patrol, parks, prisons and road construction.

Deal's administration announced in September that the state's reserves had hit $2 billion. One of the governor's top priorities has been to leave office in 2019 with at least $2 billion in the state's "rainy day" savings account, and the state hit that mark more than two years early.

Despite recent good fiscal news, Deal has asked state agencies to hold the line on spending again this year.

By contrast, some states could be slashing budgets in a few months. State’s with big declines in revenue have seen major hits to corporate and personal income tax collections, as well as to their takes from sales taxes. The report said some of that was due to a weak stock market performance.