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Notes From the Senate
Monday, 10 June 2013

June 10--  State Senator Jack Hill of Reidsville provides an analysis of the state's current revenue status.


The eleventh month of the fiscal year saw an increase of over $100 million in state revenues but timing issues with replacing the sales tax on automobile sales with title fees clouds a clear view.  Total collections for May were $1.348 billion with a net increase of $106.3 million over May of 2012, an increase for the month of 8.6%.


Individual Income Tax collections showed an increase of 6.1% or $37.5 million.  Refunds were less this month than last year, a positive sign.


The shifting of automobile sales tax to title fees has really muddied the water of the Sales Tax category.  The delay allowed in turning in title fees has delayed being able to compare loss of sales tax collections to gains in the Title/Tag fee category.  But this month really began the catch-up, it appears.  Sales Taxes only showed a total collection of $418.3 million with a net decrease to the state of -$30.3 million or -6.8%.  But the Title/Tag gain for the month was $60.8 million on total collections of $86 million.  So there was a net gain, but it is probably not a one month gain but an accumulation.  The delay allowed in turning in title fees is causing net effects of the loss of sales tax collections to gains in the Title/Tag fee category to lag.


There was a counteracting increase in other areas of Sales Tax collections which improved the performance of the category.  Increases in collections from Food/Bar/Grocery, General Merchandise and Retail Sales led the way.


Motor Fuel Tax collections were up by a net of $9 million or 11.1% with excise taxes up 9.5% and sales taxes up 12.3%.


Corporate Tax collections continued a FY2013 rebound with another gain of $18.7 million for the month.  Tobacco taxes were up 2.6% and Alcoholic beverages were about even.



With a month to go, FY2013 is shaping up to be an encouraging year with the prospect of adding the most to the RSR in a number of years. 


Total revenues YTD are $15.4 billion with a gain of some $914.6 million, or 6.3%.  This, of course, meets budget projections.


Individual Income Taxes are up $600.2 million on total collections of $7.9 billion. That is an increase of 8.2% which is really positive and points to increased employment and economic activity. 


Sales Taxes are confusing to say the least, but maybe time will give us a perspective to evaluate how the state is really doing.  But prior to the conversion from sales tax to title fee for new auto sales, sales tax collections were anemic and essentially not growing.  So now with the removal of new car sales tax collections, the category is showing negative figures and comparing those to net gains in collections of Title/Tag fees is still difficult due to timing delays in the beginning of the conversion.  But As time goes by, it should be easier to compare.  YTD, net Sales Tax collections for the state are up 0.2% or only $8 million on total collections of $4.9 billion.  This category has historically provided about one third of total state collections, but those days are no more and we will have to start memorizing a new set of percentages.


Motor Fuel Taxes are down for the year -2.5% or -$22.7 million with Sales Taxes down -4.1% and Excise taxes down slightly at -0.3%.


Probably the strongest indicator of economic recovery has been the resurgence of Corporate Tax collections which, in FY2013, totals so far $640.5 million and is showing a net gain of $204.6 million.  That's about 47% of a net gain so far this year and the category is only 4% of total collections.


Tag/Title Fees show an increase of $87.1 million so far on collections totaling $366.3 million. So the gain of both Title fee and Sales Taxes together total about $95 million YTD.


Tobacco Tax collections are down -3.1% but Alcoholic Beverages are up slightly at 0.6%.  Other Fees, which represent collections, not yet categorized, are up $71.2 million for the year.       


So here is the distribution YTD for Tax collections which reflect current trends:


            Individual Income             $ 7.9 billion           51.6%

            Sales Taxes                      $ 4.9 billion           31.8%

            Corporate Taxes              $ 641 million           4.1%

Tag/Title Fees                   $366.3 million         2.3%

Motor Fuel Taxes             $895.2 million          5.7%

All Other                           $ 722 million            4.5%


Interestingly, here is the breakdown of where the gains in revenue are coming from:


Individual Income Tax        $600.2 million       65.6%

Sales Taxes                        $ 8.1 million           0.8%

Tag/Title Fee                      $ 87.1 million         9.5%

Corporate Taxes                $204.6 million      22.3%

Motor Fuel                        -$  22.6  million     -2.4%

Other Revenue                   $ 71.2   million        7.7%

TOTAL REVENUES:        $914.6 million



So, as Yogi Berra said "Making predictions is tough...especially when they are about the future."  And that is true right now.   While economic activity is definitely picking up and there are positive signs in Georgia's revenue flow, it is increasingly difficult to grasp the new picture of the direction that some categories are headed.



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