Georgia state revenue drops in August with big decline in income taxes

The Georgia Capitol.

The Georgia Capitol.

State tax collections continued the trend of most recent months, dropping 1.1% in August at the same time Gov. Brian Kemp was telling state agencies they can request more spending in the coming year.

Adjusted for the fact that gas taxes weren’t collected in August 2022 — and they were this August — the decline was 4.8%.

The comparative drop was similar to most recent months — excluding July — when collections were down from 2022, a year that produced a record state surplus as the economy boomed.

It comes after the state ended the past fiscal year June 30 with a surplus of more than $5 billion. Which came a year after the state ended its fiscal year with a $6.6 billion surplus.

Kemp told state agencies in August that they could request up to 3% worth of enhancements to their budgets in the coming year, a break from the past, when governors were reluctant to suggest spending boosts.

State tax collections had been on a bit of a losing streak in recent months. The most recent surplus was due in large measure to Kemp’s extremely conservative estimates for tax collections, which the state exceeded.

For August, collections ran about $25 million behind August 2022. For the first two months of the fiscal year, collections are up 5.8%, exclusively because in the first two months of fiscal 2022, the state wasn’t collecting fuel taxes. If it had been, revenue would be down $100 million over that period.

Income tax collections dropped 5.2% in August, while gross sales tax collections were up 3%.

Income and sales taxes make up the majority of the state’s revenue to pay for K-12 schools, colleges, public health care, prisons, policing, business regulation and a host of other services.

Kemp this week announced that he would suspend the gas tax to help Georgians pay prices at the pump. The gas tax suspension costs the state — and saves drivers — about $180 million a month.