Tax collections dip 4.3% as slump continues

Slower growth in February doesn’t deter spending plan.

Georgia’s tax take was off 4.3% in February, the same month Gov. Brian Kemp signed a record midyear state budget.

For the first eight months of the fiscal year, which began July 1, collections are up 1.1%, or $223 million, over the same months in fiscal 2023. Excluding fuel taxes — which weren’t collected for half of fiscal 2023 — collections are down 3.4% this year.

The numbers aren’t particularly surprising to the Kemp administration, which projected slow revenue growth for the next year.

Collections were stagnant for most of 2023 as well after three years of skyrocketing growth fed a burgeoning state budget.

That matters because the money the state collects in taxes helps pay for K-12 schools, colleges, public health care, prisons, policing, business regulation, roads and other services.

In February, individual income tax collections were way off when compared with February 2023. Income tax collections — which were down 19% from the previous February — are the state’s largest source of revenue. Sales tax collections, the second-largest source of revenue, were up 3%.

Last month Kemp signed a record $37.9 billion midyear budget that runs through June 30.

It includes $5 billion in new spending, including money for massive renovations on Capitol Hill, a new medical school at the University of Georgia, a new state prison, and miles and miles of state roads.

Stagnant or falling tax collections and higher spending normally wouldn’t go together in a state that is mandated to have a balanced budget.

But the state has $16 billion in “rainy day” and undesignated reserves due to the money taken in during the post-COVID-19 shutdown recovery and conservative budgeting.

In October, The Atlanta Journal-Constitution reported the state had a $5.3 billion surplus in the fiscal year that ended June 30 — the third consecutive massive annual surplus.

Last week the Georgia House passed a slightly less ambitious fiscal 2025 budget that still includes 4% raises for many state workers and more money for law enforcement, education and mental health care programs.