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.
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.
