Capitol Recap: Steep drop in Georgia tax revenue indicates a slowing economy

The key to April’s drop-off was individual income tax collections, the largest source of money for the state. They were off by $1.02 billion, or 32%.

It was actually the second monthly dip in a row.

In March, overall collections were down by 3% from the same month in 2022. That, too, could be traced to income taxes, which declined by $400 million.

Before that, the state had seen month after month of gains since the end of the COVID-19 shutdown of the economy, posting massive surpluses in fiscal 2021 and 2022.

Those big years, including a record $6.6 billion surplus in fiscal 2022, allowed the state to boost state employee and teacher salaries and expand services for things such as mental health and substance abuse programs, law enforcement and education.

It also enabled legislators to send about $1 billion back to taxpayers as rebates in each of those two years.

That may not happen if April’s big dip becomes part of a trend.

Collections for the first 10 months of fiscal 2023, which ends June 30, are less than 1% ahead of last year — the state’s worst performance in terms of gains since the beginning of the pandemic.

It was what many expected, although maybe not as severe as they feared.

Kemp’s staff had projected revenue to fall by $3 billion because of the impact last year’s declines in the stock markets — the S&P 500 index was down almost 20% — would have on capital gains taxes paid this year.

While all income tax collections aren’t yet accounted for, it now appears the state’s loss will not reach $3 billion.

“If you are looking for a silver lining ... we are slightly encouraged because the revenue decline was much smaller than we thought it might be,” said Senate Appropriations Chairman Blake Tillery, R-Vidalia.

While individual income tax collections were responsible for the biggest bite, the report also raised some concerns about sales tax collections, the second-largest source of revenue for the state.

The state continued to benefit from consumer spending and the impact higher prices from inflation have on taxes. Net sales tax collections, however, were only up 2.4% last month over April 2022, far slower than the pace seen in most previous months.

Corporate income tax collections remained strong. They are up more than $1.3 billion for the fiscal year. But if the economy falters later this year, those, too, could fall.

Tillery said there are signs that an economic slowdown is coming, but he said, “Georgia is going to fare better than the nation.”

Credit: Jason Getz/AJC

Credit: Jason Getz/AJC

GOP group moves to block candidates it says are ‘traitors’ to Republican principles

When Georgia Republicans hold their convention next month in Columbus, they will likely have to talk about what is a Georgia Republican.

The Georgia Republican Assembly, a faction from the right flank of the state GOP, thinks the party needs to do more to stop candidates who are, in its eyes, not Republican enough.

Some of those who fall short are Gov. Brian Kemp and Secretary of State Brad Raffensperger, long the targets of its derision for refusing Donald Trump’s demands to illegally overturn the 2020 election.

The GRA is proposing that the 1,500 or so delegates to the Georgia GOP convention could vote to prevent what the party considers an unworthy candidate from running as a Republican in the next election.

“If the candidate has shown himself to be a traitor to the principles of the party, then the party can vote to exclude him from qualifying at the next election,” Nathaniel Darnell, a GRA leader, said during a recent address to the state Constitution Party.

If Darnell’s name sounds familiar, he drew attention earlier this year at an anti-abortion rally where he led a prayer thanking God for the death of former Republican state House Speaker David Ralston.

Darnell was also one of many GRA members who helped win a a string of victories for the group at the GOP’s recent county-level and districtwide meetings.

Another was Kandiss Taylor, who campaigned against Kemp last year in the GOP primary on a slogan of “Jesus, Guns and Babies.” She also attacked fellow Republicans as Communist collaborators who were part of a “Luciferian Cabal.”

Now, Taylor is the chair of the Savannah-based 1st District GOP, and she has called for a purge of every Republican elected official in Georgia.

The proposed rule is hardly a done deal. First, it faces vetting by the state GOP’s rules committee before it can be voted on at next month’s convention. If it succeeds at that level — which party insiders view as unlikely — it would face immediate legal challenges from the first candidate rejected under the new rules.

Still, GOP officials are taking the proposal seriously.

Alex Johnson, the GRA’s president, said he is prepared to defend the proposal in court. He sees help for his cause in a 2000 U.S. Supreme Court ruling and the Wyoming GOP’s vote to oust former U.S. Rep. Liz Cheney.

He says it’s needed to give voters “an unmediated way to hold their elected officials accountable.”

“This rule, if adopted,” Johnson wrote in a recent newsletter, “would compel the Atlanta Establishment to no longer ignore the people back home who do most of the campaigning for them in election season.”

Credit: Steve Schaefer/AJC

Credit: Steve Schaefer/AJC

Kemp vetoes needs-based financial aid for college students, aid to veterans

Gov. Brian Kemp says he supports programs to help veterans and make education affordable.

But he vetoed House Bill 249, a measure that was designed to provide more needs-based financial aid to Georgia college students and offer tuition-free training to help veterans obtain a commercial driver’s license.

The financial aid portion of the bill would have meant more money for students — upping the maximum award from $2,500 to $3,500 — and made them eligible to receive it earlier in their studies. The training program for veterans has long been a priority for its advocates.

All that made it a popular bill in the General Assembly — it saw only two “nay” votes as it worked its way through the legislative process, one in the Georgia House and one in the state Senate.

But Kemp said “nay,” as well, rejecting it because it was “subject to appropriations and the General Assembly failed to fully fund these educational incentives” — politico speak meaning it needs more work on how to pay for them.

In all, Kemp vetoed 14 bills that won passage during the legislative session, and this was the second one dealing with higher education.

In early April, he shot down a bill that would have required legislative approval before state universities could raise tuition or fees by more than 3%.

Those types of decisions will remain in the hands of the state Board of Regents, a panel that Georgia governors frequently fill with some of their biggest donors.

In rejecting House Bill 319, Kemp cited the separation of powers established by the state constitution. Essentially, he said tuition and fees are a matter for the executive branch; legislators need not get involved.

Credit: John Spink/AJC

Credit: John Spink/AJC

Counties will have to pick up costs for improvements to voting devices

County governments will have to pay for upgrades to tablets used to check in voters at their polling places, even though legislators had set aside $550,000 for the work.

Gov. Brian Kemp blocked the state funding for technology intended to reduce wait times at precincts. The governor wrote in a message that accompanied his line-item vetoes to the state’s $32.4 billion budget that the secretary of state’s office should disregard an item calling for a statewide data plan to connect check-in tablets to a cellphone network.

He said local governments are responsible for data plan contracts for election equipment.

Gabriel Sterling, chief operating officer of the secretary of state’s office, said that during a test run last year the connected tablets, called PollPads, reduced early voting check-in times by about a minute per voter.

The new early voting check-in process allows poll workers to verify voter registration information and issue activation cards for voting touchscreens at the same time. Voters will no longer be required to fill out paper forms, hand them to one poll worker, then go to another station to receive a touchscreen activation card.

Sterling said some of the additional costs that will fall on local election offices are minimal. Network connections cost about $38 per early voting location, or roughly $12,000 for the entire state in each election, Sterling said.

The biggest part of the $550,000 in funding would have paid for tablet connections on election day, when many more polling places and tablets are needed. Election officials would be able to remotely monitor check-in times, slowdowns and technical difficulties.

The money would have funded initial costs of the data network during next year’s primary elections and runoffs, and then county governments would have been responsible for costs in the 2024 general election.

Earlier this month, Kemp signed into law a ban on donations to county election offices, making it a felony for local governments to accept money from nonprofit organizations that gave millions of dollars during the 2020 presidential election.

Limiting outside election money became a priority among Republicans in Georgia and across the country after the Center for Tech and Civic Life, which was funded by Facebook founder Mark Zuckerberg, contributed more than $400 million to election offices nationwide during the first year of the coronavirus pandemic.

About $45 million of that money was given to local election offices in Georgia. Most of it went to Democratic-leaning counties, but several Republican areas also received grants.

The money was used to pay for, among other things, equipment to process mail ballots, protective gear for election workers, election staffing, absentee ballot postage costs and voter outreach.

Credit: Arvin Temkar/AJC

Credit: Arvin Temkar/AJC

Walker request for donation from billionaire spurs request for investigation

Former U.S. Senate candidate Herschel Walker is facing a complaint filed with the Federal Election Commission accusing him of directing campaign donations to one of his businesses.

The group, Citizens for Responsibility & Ethics in Washington, or CREW, is seeking an investigation into Walker and his company, HR Talent, for what it says are “direct and serious violations” of campaign finance laws.

The complaint comes after The Daily Beast reported on emails that show the Georgia Republican sought $600,000 from Montana billionaire Dennis Washington, asking him to direct $535,200 of that money to HR Talent.

The emails also appear to show Washington’s staff later tried to have the money redirected to 34N22, a super PAC that supported Walker’s unsuccessful campaign against Democratic U.S. Sen. Raphael Warnock. In a follow-up article, Washington’s team told The Daily Beast that the money was ultimately returned.

Noah Bookbinder, the president of CREW, said the emails show Walker seeking campaign donations in excess of the amounts candidates are allowed to receive directly from individuals. It’s no less serious, he said, because the money was later returned to Washington.

“The fact that the donor realized that there was something that wasn’t right here, asked for the money back and the campaign, reportedly at least, returned it to him: That doesn’t change the fact that it was illegal — blatantly illegal — for Herschel Walker,” Bookbinder said.

An attorney for Walker did not respond to a request for comment about the complaint. The Atlanta Journal-Constitution could not reach a representative for Washington, but his spokesman told The Daily Beast that the $535,200 initially sent to a “nonpolitical account” was returned. That statement did not say when the refund took place.

When the FEC receives complaints, it first reviews the documentation to ensure the matter falls within its jurisdiction before launching a fact-finding investigation. Complaints can take months to sort out, and only after cases are closed is documentation made public.

Political expedience