Georgia Tax Revenues Fall by Double Digits Despite Record Spending, Raising Concerns

According to the state Department of Revenue, state tax receipts fell 12.6% in March compared to last year. This fall compounds recent declines, threatening the state’s financial health.

Year-to-date tax receipts are more positive, falling only 0.5% from the previous fiscal year’s first nine months, but this statistic is skewed. Gov. Brian Kemp suspended gasoline and motor fuel taxes for a major period of the previous year, but the state’s decision to restart them appears to have stabilized tax collections. Without these funds, state tax collections fell 4.3% in the first nine months of fiscal 2024.

This fall is mainly due to Kemp and the General Assembly’s recent income tax rate cuts, which reduced individual income taxes by 16.1% in March. Last month, net sales tax receipts fell 4.5% from March of the previous year, reflecting economic issues.

Corporate income tax revenues fell 28.3% in March due to a large revenue agency refund increase and a sharp drop in payments. This steep drop highlights businesses’ financial difficulty in the current economy.

Despite these concerns, Georgia lawmakers passed a record $37.9 billion midyear budget in February and a $36.1 billion fiscal 2025 spending plan. These budgets offer 4% cost-of-living raises for most state and university system employees and additional support for state agencies with high turnover, including law enforcement and welfare.

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The state’s budgetary viability is threatened by its ambitious spending plans and dwindling tax collections. Georgia has had a $16 billion budget surplus for three years, but economic uncertainty and revenue stream uncertainty require conservative financial management and judicious expenditure priorities. Policymakers must balance short-term expenditure requirements with fiscal stability and resilience as the state navigates these difficulties.

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