State tax collections continue to make a comeback from the Great Recession, but Gov. Nathan Deal’s budget office instructed state agencies to take a conservative approach and plan to hold down spending in the near future.
“Georgia continues to experience increasingly strong economic growth, a trend that we expect to continue into future fiscal years,” Teresa MacCartney, the governor’s budget director, wrote in a memo to state agency heads.
State tax collections increased 11.5 percent in June, ending the fiscal year with a strong month and guaranteeing a surplus, the governor’s office said Monday.
Collections for the year that ended June 30 were up 5.2 percent, or about $880 million. That’s well above the 3.7 percent growth rate needed to meet the year’s $20.2 billion budget.
The state saw gains in both income and sales taxes last month, a good sign for the economy. Two other major taxes — on corporate income and motor fuels — were 28.2 percent and 8.6 percent ahead of June 2013, respectively.
For the fiscal year, corporate income taxes, which plummeted during and after the Great Recession, rebounded with an 18.4 percent increase. Corporate income taxes fell to $590 million in fiscal 2012. In the recently completed fiscal year, they hit $944 million, about where they were in 2008 before the recession.
In issuing instructions to state agencies for preparing budget requests, MacCartney said continued gains in tax collections will provide enough money to fund growth in education, health care and pension programs.
Nonetheless, she told agency directors that most of them would have to submit budget requests for the upcoming year that showed no growth in spending. School and health care programs with enrollment increases and the pension systems would be able to request increases in spending.
The state budget helps provide education for about 2 million students in Georgia. It funds health care for 2.4 million Georgians. It pays for parks, road improvements and prisons, economic development initiatives, cancer research, business regulation, and water and sewer projects.
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