Georgia’s Tax Revenue Report: $2.6 Billion Above Projections and What It Means

Georgia’s tax collections exceeded projections by over $2 billion for the budget year ending June 30, despite a slight drop in revenues. This means that the state’s surplus will be larger than expected when the 2024 budget year wraps up, even though Governor Brian Kemp and lawmakers chose to spend part of it earlier this year. The estimated surplus currently stands at $10.7 billion.

Kemp’s administration has consistently underestimated tax collections, leading to a larger surplus instead of using the money to increase government spending or cut taxes. The governor sets limits on spending for lawmakers.

Garrison Douglas, a spokesperson for Kemp, estimates the surplus over projections to be around $2.2 billion, but this figure may change as final accounting is completed. Some tax data from other agencies was not available yet.

Overall tax collections fell by 0.5% in the 2023 budget year, indicating a potential slowdown in Georgia’s economy. Income tax collections, the largest revenue source, dropped by over 5%, partly due to income tax cuts introduced on January 1. Sales tax revenues were stable, suggesting reduced consumer spending.

However, the drop in income tax collections was offset by a full year of gasoline and diesel tax collections, which had been waived for part of the previous budget year. Taxes collected by the Department of Revenue were $2.6 billion above January’s projections, with a significant boost in June, especially from corporate income taxes.

The surplus, initially $10.7 billion at the start of the year, will decrease due to increased spending for 2024, including $1,000 bonuses for state employees and teachers, roadbuilding projects, and new buildings.

In addition to the surplus, Georgia has a $5.4 billion rainy day fund. This marks the fourth consecutive year of large surpluses, following $3.7 billion in 2021, $6.4 billion in 2022, and $5.3 billion in 2023.

Critics argue that Republicans are limiting spending and not expanding Medicaid coverage for low-income adults. However, the new budget includes pay raises for teachers and state employees, and increased spending on education, healthcare, and mental health services.

The state’s budget supports education for 1.75 million K-12 students and 450,000 college students, manages 51,000 state prisoners, maintains 18,000 miles of highways, and provides care for over 200,000 people with mental health issues, developmental disabilities, or substance addiction.