Kemp: No state gas tax through the holidays, but levy returns in January

Gov. Brian Kemp signed an executive order Thursday continuing the suspension of the state sales tax on motor fuel for another month, this time through Jan. 10.

After that, he said, the 29.1 cents-a-gallon tax will return for Georgia drivers for the first time since lawmakers approved the suspension in March.

Continuing the tax break has had broad bipartisan support even as fuel prices dropped. The governor signed a law in March that cleared the Legislature with the backing of most Democrats and Republicans to allow him to suspend the gas tax through May, and he’s since announced extensions each month, benefiting from a wave of media coverage each time as he ran for reelection.

The aim was to hold down prices at the pump at a time of rising fuel and grocery costs. However, prices have been falling for months. The average price for a gallon of gas in the U.S. on Thursday was $3.32, according to AAA. In Georgia, the price was $2.92, down from $4.33 on July 1.

The governor said the latest suspension would allow Georgians to spend the savings over the holidays, but he added that it “was always intended as a short-term answer to a long-term” problem.

At a press conference Thursday, he told reporters: “We are going to transition away from that temporary program to other items we are going to use to fight inflation. We can’t continue to pay what we are ... on the gas tax suspension.”

The suspension costs the state — and saves drivers — $150 million to $170 million a month. Kemp said Georgians have saved more than $1 billion so far.

Gas tax money goes for roads and other transportation projects, and Kemp has pledged to backfill the lost revenue with excess money the state collected last fiscal year.

During a press conference with Lt. Gov.-elect Burt Jones, House Speaker Jan Jones, R-Milton, and Rep. Jon Burns, R-Newington, who will become speaker in January, Kemp said the state will pivot toward other measures to help Georgians deal with inflation.

The governor announced during his reelection campaign that he wants lawmakers to refund about $2 billion of last fiscal year’s state surplus to taxpayers. He wants lawmakers to back an income tax refund — similar to the one this year that meant $500 for joint filers — and a property tax break that he said would save homeowners about $500.

Kemp, who won reelection last month, has the financial flexibility to help Georgians fight inflation because state tax collections have been on a roll for more than two years.

Nothing, from talk of a national recession to the slumped stock market to rising interest rates, has so far dented Georgia’s revenue picture.

In the first four months of this fiscal year, collections were up 7.8%, or $744 million, over the record-breaking fiscal 2022 numbers, despite the fact that Kemp continued to suspend the gas tax.

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 COVID-19 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.

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.

State income tax collections have been on the rise since shortly after the beginning of the COVID-19 pandemic, when Congress first passed massive federal aid spending. 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.