State revenues drop by nearly 3% in April

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Georgia’s tax collections decreased by 2.9 percent in April compared to the same month last year, the first year-over-year decline in state revenues in 18 months.

Revenue collections were just $1.678 billion in April, a number that was down by $50.1 million from the April 2013 level.

Plummeting income tax revenues were the main culprit – the revenue department recorded only $867.6 million in individual income taxes, a 14.5 percent decline of $147.3 million from the April 2013 total.

A statement released by Gov. Nathan Deal’s office attributed the dropoff to a onetime acceleration of capital gains by taxpayers:

“April 2013 net revenues were boosted by a spike of more than $170 million over the prior April in individual income tax payments for returns, estimated payments, and assessments compared to April 2012. This spike was related to taxpayers accelerating capital gains and other income into tax year 2012 to avoid anticipated higher federal income tax rates in 2013. This shifted tax liability for Georgia’s FY 2014 and later years to FY 2013. As a result of that one-time shift in tax liability, this year’s April payments dropped by $102 million compared to last year, but still reflected strong growth when compared to April revenue collections prior to 2013.”

On the other hand, there was an increase in sales tax revenues for the first time since the state eliminated the sales tax on vehicle purchases last year. Net sales tax revenues in April were $469.7 million, which was a 12.7 percent improvement over the April 2013 figures (and a revenue bump of $52.9 million).

Motor vehicle title fees, which replaced the sales tax on car purchases, continued to show healthy growth: they were $94.8 million in April, a whopping 99.9 percent increase from the $47.5 million collected for April 2013.

Corporate income tax collections, however, declined by 9.1 percent to $107.7 million in April.

For the 10 months of the current fiscal year, state revenues are up by 4.7 percent compared to the same period last year: $14.73 billion, an increase of $654.7 million in revenue collections.

“This dip in April was expected,” said Alan Essig, executive director of the Georgia Budget & Policy Institute. “Based on job numbers, we seem to be in line for continued moderate revenue growth.”

Essig estimated that revenue growth for the fiscal year ending June 30 would be “in the 5 to 5.5 percent range,” which he said would enable the state to put aside about $190 million for the required education midyear budget adjustment and increase the revenue shortfall reserve fund by $200 to $300 million.

The last time Georgia reported a decrease in monthly revenue collections was November 2012, when they declined by 0.7 percent.

© 2014 by The Georgia Report

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Tags: Alan Essig , April collections , state revenues