Georgia tax collections rebound, but state officials cautious about future

Credit: Arvin Temkar/AJC

Credit: Arvin Temkar/AJC

A month after state tax collections dipped for the first time in more than a year, they rebounded in December.

Collections were up 7.5% — about $225 million over December 2021 — a month after a small decline in November.

The increase last month occurred despite the fact that Gov. Brian Kemp extended the suspension of the state motor fuels tax through December, which likely cost the government — and saved motorists — about $170 million last month.

The state suspended the gas tax in the spring to help Georgians deal with rising fuel prices. Huge growth in income and sales tax collections have made up for the loss of fuel taxes in previous months. The gas tax returned earlier this week.

Personal income tax collections were off 6.5% in December, but the take from the corporate tax was way up. Net sales tax collections improved 7.5% over December 2021. Income and sales tax collections make up a majority of the state’s revenue used to pay for everything from K-12 schools and public health care to law enforcement and road construction.

For the first half of fiscal 2023, collections are up 6.5%, or $966.7 million, over the same period the previous year. Still, the governor’s budget office projected a decline in revenue this fiscal year when it released Kemp’s spending plan for the coming year.

The state has run big surpluses the past two years. After all the bills were paid and agencies returned leftover funds, the state’s surplus for fiscal 2022, which ended June 30, was about $6.6 billion, The Atlanta Journal-Constitution reported in September.

The taxes the state collects help it educate 2 million children, provide health care to more than 2 million Georgians, manage and improve parks, investigate crimes and incarcerate criminals, and regulate insurance firms, utilities and dozens of professions. The state issues driver’s licenses and helps pay for nursing home care for the elderly.

The state is a major provider of treatment for mental health and drug addiction. Besides paying salaries, it helps make sure that hundreds of thousands of former teachers, university staffers and state employees receive pensions and health care.

State income tax collections have been on the rise since shortly after the beginning of the COVID-19 pandemic, when Congress first passed massive spending on federal aid. Inflation has helped boost sales tax collections, with goods costing more and the taxes on them rising, and wages have also increased as unemployment hit record lows and businesses scrambled to fill job openings.

December tax collections

The state of Georgia’s tax collections for December, compared with December 2021:

  • Individual income taxes: down 6.5%
  • Corporate income taxes: Up 109%
  • Net sales taxes: up 7.5%
  • Motor fuels taxes: down 100%*
  • Hotel/motel fees: up 5.7%

Source: Georgia Department of Revenue

* Gas tax collections were suspended for December 2022