Georgia has more than $16 billion in reserves, but tax collections slipping of late

The state of Georgia in June completed its third consecutive fiscal year with a big surplus, but the revenue trend isn’t necessarily going in the right direction.

In most recent months, adjusted state revenue collections have been below what they were in 2022. Taking away the money the state raised from collecting gas taxes for much of September — something the state wasn’t doing in September 2022 — and overall revenue was down again 3.2% last month, the governor’s office reported Monday.

Gov. Brian Kemp has again suspended gas tax collections, meaning the state will lose about another $190 million a month, likely through the end of the year.

That’s good news for drivers, who are seeing lower fuel prices as a result.

For the first quarter of fiscal 2024, state tax collections are up 6.1% over the same period in 2022, but again, that’s because the state has been collecting gas taxes for most of that period, and wasn’t in 2022. Without that money, the state — overall — would be about $100 million behind last year.

That matters because the money the state collects in taxes helps pay for K-12 schools, colleges, public health care, prisons, policing, business regulation, roads and a host of other services.

The state revenue numbers are also seen as a sign of the strength of Georgia’s economy since the majority of the money comes from income and sales taxes. Individual income tax collections were off 10% in September, and are down almost $140 million for the first quarter of the fiscal year as compared with 2022. Gross sales tax collections are only up about 2%.

This comes after the state ended the past fiscal year on June 30 with a surplus of $5.3 billion, according to another report out Monday. Which came a year after the state ended the previous fiscal year with a $6.6 billion surplus. The most recent surplus was due in large measure to Kemp’s extremely conservative estimates for tax collections, which the state exceeded in fiscal 2023.

The state had about $16 billion in general fund reserves at the end of the fiscal year, about one-half a year’s spending. During the Great Recession, in 2010, state reserves were down to about enough to operate the government for one day. Of that $16 billion, almost $11 billion are in “undesignated” reserves, meaning they can be used for a wide range of things.

Danny Kanso, senior fiscal anaylst for the Georgia Budget & Policy Institute think tank, said, “With over $10.7 billion in undesignated reserves at the conclusion of fiscal year 2023, Georgia is positioned to make historic investments in the future of its residents by expanding access to affordable child care, upgrading tens of thousands of school buses and addressing a host of urgent workforce needs.

“Abundant resources are available to sustain both major one-time investments and to address ongoing needs across state government.”

However, Garrison Douglas, the governor’s press secretary, said, “We still have to budget conservatively and strategically, not spend one-time money on long-term liabilities.”

The governor warned state lawmakers earlier this year that the U.S. economy could be wobbly heading into the fall, and he cut some of the money they budgeted for this fiscal year.