ATLANTE – Georgia could have more than $5 billion in excess revenue after the fiscal year just ended, following another big month of tax collection in June.
The state Department of Revenue said Friday it collected more than $33 billion in taxes in the year ended June 30, up 23% from about $27 billion l ‘last year.
Georgia planned to spend more than $54 billion in the budget year just ended, including federal money, lottery proceeds, and other fees and taxes that state agencies collect. . Lawmakers increased that number by $4.5 billion in a mid-year budget review that included bonuses and pay raises for state employees and teachers, but will still be significantly lower than total revenue for the year.
The final numbers won’t be clear until the state closes its books on the budget year, which usually happens around Labor Day.
The bloated bank account could allow the state to further reduce taxes or expand services. Republican Gov. Brian Kemp has already extended a temporary gasoline tax waiver through mid-August, and Democratic gubernatorial candidate Stacey Abrams has called on Kemp to extend the gas tax exemption. gasoline until the end of the year. Kemp can make that decision as long as lawmakers ratify it later.
This state must transfer about $150 million in savings to maintain road construction efforts for each month of the gas tax exemption.
Georgia posted a $3.7 billion surplus in the 2021 budget, filling its rainy day fund to the legal limit and leaving an additional $2.3 billion in undesignated surplus that Kemp used to provide income tax refunds worth $1.1 billion, in addition to paying for the gas tax holiday.
This year, a few hundred million more dollars will top up the national rainy day fund, which by law holds up to 15% of the previous year’s tax revenue. Most will end up as undesignated surplus — money that Kemp and lawmakers can spend as they please.
Abrams’ top priority is to expand the Medicaid health insurance program to uninsured adults. She said the state’s revenue position is strong and she’s ready to spend some of the surplus to pay for Medicaid, further teacher salary increases and other priorities.
“And so the question is not ‘Do we have the resources?'” Abrams said last month on a call with reporters. “The question is what are we prepared to do with the resources we have?”
But Republicans might be cautious because they passed a major income tax cut that begins Jan. 1, 2024. Changing Georgia’s income tax from a system with a top rate of 5.75% and lower brackets below a 5.49% flat tax could forfeit $450 million. in tax revenue the first year. The measure provides that the tax rate then falls by a tenth of 1% each following year, to reach 4.99% from 2029, unless overall revenues stagnate. This could represent an overall tax reduction of $2 billion.
Kemp tweeted on Friday that “budgeting conservatively” means “Georgians benefit from efficient government and we were able to return taxpayers’ money to surplus where it belongs – in their pockets!”
Georgia’s budget pays to educate 1.7 million K-12 and 435,000 college students, house 47,000 state prisoners, pave 18,000 miles (29,000 kilometers) of highways and care for more than 200,000 people with mental disorders, developmental disabilities or drug or alcohol addiction .
Danny Kanso, who studies taxes and budgets for the liberal-leaning Georgia Budget & Policy Institute, said lawmakers cut spending during uncertain times at the start of the COVID-19 pandemic, saw revenues rise “ and then we basically didn’t adjust. ”
“The governor has stuck to very conservative revenue estimates, persistently, three years out now,” Kanso said last month. Georgian lawmakers can only spend the amount of revenue estimated by a governor.
Kanso argued that Georgia’s budget framers should abandon the austerity mindset that has governed state spending since the Great Recession.
“We have this opportunity to make an adjustment to what is a very basic budget,” he said.
Kanso said the days-old 2023 budget, which plans to raise $30 billion in public funds, should also produce another big surplus unless there is an unprecedented drop in tax revenue. Even if revenues remain stable, Georgia could reap another surplus of more than $4 billion next year.
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