Only months after the state finished its fiscal year with a record surplus, tax collections continued to soar in September, suggesting Georgia’s economy remains hot.

Collections — mostly income and sales taxes — were up just over 30% from September 2020. For the first three months of the fiscal year that began July 1, collections are up 14.6%, or more than $900 million.

Rising sales and income tax collections are generally considered a sign of a growing economy, although hiring and supply chain issues in Georgia remain.

Last month the state reported a $3.7 billion surplus in fiscal 2021, which ended June 30, after seeing collections grow 13.5% during that period, despite the fact that Georgia was fighting the COVID-19 pandemic. That, plus $4.8 billion in federal COVID-19 relief funds, means Gov. Brian Kemp and lawmakers will have a lot of decisions to make about what to do with the extra money.

Georgia isn’t the only state seeing rising tax collections. Governors across the country are trying to figure out what to do with hefty surpluses and federal largesse in the form of COVID-19 relief funds.

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, and it helps fund public health programs that are fighting the pandemic. Besides paying salaries, it helps make sure that hundreds of thousands of former teachers, university staffers and state employees receive pensions and health care.

Kemp has already announced that some of the COVID-19 money will go for bonuses for police, prison and jail guards, EMTs, firefighters and other first responders. Facing reelection in 2022, he will also want the General Assembly to approve a pay raise for teachers to meet a campaign promise he made three years ago.

The majority Republicans in the General Assembly will almost certainly push for a tax cut, while Democrats have said they want more money to go to education and health care so that fewer Georgians are uninsured.

The unemployment rate in metro Atlanta fell to 3.1% in August from 3.2% the month before, though that calculation partly masks the true labor picture since it does not include people who are no longer looking for jobs. The labor force shrunk by 22,332 from July to August, and there are still fewer jobs than there were pre-pandemic.

In August, the Port of Savannah had its second-busiest month on record, handling 485,595 containers. That was 10% higher than the same month a year ago, which was then a record for August. But ships have backed up in the port over supply chain issues, getting the goods off the boats and to stores and consumers.

Growth continues

State tax collections during the first quarter of fiscal 2022 vs. fiscal 2021

Individual income tax — +5.7%

Corporate income tax — +29.6%

Gross sales tax — +17.7%

Motor fuels — +9.4%

Tobacco — +4%

Alcoholic beverages — +1.6%

Hotel/motel fees — +50.3%

Source: Georgia Department of Revenue