Georgia tax collections showed continued strength in July, another sign that the economy is picking up and that the state will have some fiscal breathing room in the months ahead.
Tax collections were up 6.7 percent last month over July 2012, led by big growth in the income tax. That’s on top of a strong fiscal 2013, which ended June 30.
After years of budget-cutting, the state’s financial situation is finally improving. In fact, it’s so good that for the first time in years, state agencies weren’t told to plan for spending cuts when the governor’s office gave them instructions for writing their budget proposals for the upcoming year.
That’s all good news for Gov. Nathan Deal, who is running for re-election next year and will be able to at least consider things that have been unthinkable in recent years, such as pay raises for teachers and state employees.
House Majority Leader Larry O’Neal, R-Bonaire said he’s seeing stronger economic growth in Georgia, in the private sector in general and in car sales in particular. He said consumers are buying cars they held off purchasing during the Great Recession and its aftermath.
Income tax collections were up 8.6 percent in July. Sales tax collections fell for the fourth consecutive month in July, but even that is not necessarily a bad sign.
Typically, slow sales tax collections mean the consumer-driven economy is losing some steam.
State officials said Monday, however, that the decline was expected because the General Assembly last year voted to end sales taxes on car purchases, starting March 1. Instead, car buyers pay a title fee. While such fees have increased, gross sales taxes were down 5 percent in July, or $43 million.
“It was very predictable,” said O’Neal, who helped write the car tax bill. “If I saw that (decline) for another few months, I would be concerned.”
While Georgia’s financial situation may be improving, state lawmakers from across the country were told Monday at the National Conference of State Legislatures’ summit in Atlanta that all may not be rosy for them. Little or no final action appears likely anytime soon on the federal budget, which may mean more debt ceiling fights and automatic spending cuts ahead.
And Arturo Perez, NCSL’s top fiscal analyst, said budget officials across the country are projecting slower revenue growth this year. While collections grew 5.3 percent nationally in fiscal 2013, Perez said budget writers expect growth to slow to 1.3 percent in fiscal 2014, which began July 1. That would not be enough to keep up with expected increases in public health care and university spending.
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