A new report says the state took in billions more in tax revenue than it spent during the recently completed fiscal year, making it likely that Georgians will be seeing another rebate in the spring as lawmakers seek to give back some of the excess money paid into the treasury.
Both Gov. Brian Kemp and his Democratic challenger, Stacey Abrams, have promised to return tax surplus money if they win in November.
The report from the state accounting office released Friday said the state ran a $6.57 billion surplus during fiscal 2022. The report said state “rainy day” reserves — meant to fill in gaps during an economic slowdown — now stand at about $5.24 billion, a record for Georgia.
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.
The state reported over the summer that tax collection for the fiscal year that ended on June 30 were up about 23% — or $6.19 billion — from last year. The surplus is what’s left over when all the bills for the fiscal year are paid and agencies remit leftover money they didn’t spend.
Kemp has already proposed refunding about $2 billion of the latest surplus to taxpayers. Abrams has said if elected, she will spend some of it to give raises to teachers and law enforcement officers and pay for an expansion of Medicaid, the health program for the poor and disabled, to cover more people. She also would refund about $1 billion of it to taxpayers.
If the refunds happen, it would be a rerun of this past spring.
With the help of massive federal COVID-19 aid, the state ended fiscal 2021 with a $3.7 billion surplus. During the 2022 General Assembly session, lawmakers approved refunding about $1.1 billion of that to taxpayers. Much of the rest was put into state reserves.
This year’s surplus is even bigger as higher wages drove up income tax collections and inflation helped boost what the state collected from sales taxes.
The state gets the bulk of its revenue from taxes on income and sales, and experts traditionally consider gains in those two areas a good sign for the economy. However, some economists warn of a possible recession ahead as inflation remains stubbornly high.
State Senate Appropriations Chairman Blake Tillery, R-Vidalia, was pleased to see the surplus but said rising costs to provide services may eat up a lot of the extra funding.
“Between having a deficit and having a surplus, you’d rather have a surplus,” Tillery said. “But some of the issues that caused the surplus are really hurting Georgia families. They are also the things that are going to increase costs not only for Georgia families but for state government.”
Tate Mitchell, spokesman for Kemp’s reelection campaign, said the governor’s and General Assembly’s leadership has put the state on “solid financial footing.”
“Just as he has over the last four years,” Mitchell said, “Gov. Kemp will continue to budget conservatively, keep taxes low and put hardworking Georgians first.”
Alex Floyd, spokesman for the Abrams campaign, said, “The numbers don’t lie: thanks in part to federal legislation passed by Georgia Democrats, we have the money to make investments in education, health care, and small businesses — all without raising taxes.
“While Brian Kemp refuses to commit to investing in our state, Stacey Abrams will put this money back in Georgians’ pockets and fully fund her plans that will give everyone the opportunity to thrive in Georgia without raising a dime in taxes.”