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Session Drawing To Close
Monday, 12 April 2010

April 13--  State Senator Jack Hill's latest update on the Georgia legislature as it draws to a close with plenty of work left to do in Atlanta.


A Ten Million gain for one month may have seemed miniscule at one time but considering Georgia has had 18 months on continuous declines in revenues, even a breakeven or slightly positive month is cause for optimism.  March is actually the second lowest month of the year traditionally and this month’s total revenue of $998 million is almost $300 million below the average monthly revenue needed to meet the revised revenue projections on $15.2 billion or $1.2 billion per month.  But we shouldn’t blame the month of March for not being December…..we should just be grateful that a turning point may have been reached.


From February on each year, the determining factor in revenues is affected greatly by tax refunds being paid out by the state and whether they are up or down in dollars compared to the year before.  This year is complicated because last year, refunds processing lagged with some $166 million not paid out until after July 1.  Paying those out in the next fiscal year left April, May and June totals appearing higher than they would have if the refunds had been processed in a timely manner.


Hopefully, this year, those refunds will be paid out before June 30, so the state can start July and FY 2011 “even-steven.”


So, here are the Revenue numbers and an analysis of the refund situation.  For March, individual income tax collections were down only -2.6%, a vast improvement.  Net Sales taxes to the state were down 11.6%.  Corporate tax collections were up $11 million or about 19%.  Motor fuel excise taxes were up 4% but motor fuel sales taxes were off 40% or a net decline of $11 million or 19%.



Total revenues at the 3rd quarter mark are down 11.5% or -$1.33 billion under the previous fiscal year.  Individual income taxes are down -11.8% and net sales taxes are down 13.3%. Interestingly, sales tax distributions to local governments are up 5.4%.  Corporate income taxes are down YTD by -10.2%.  Motor fuel excise taxes are slightly up at 1.1% but sales taxes are down 22%.  Total motor fuel tax collections are down YTD by $73.6 million or 10.9%.



The amount of refunds affects state revenues directly.  So far this fiscal year, the number of tax refunds has increased some 300,000 and the dollar amount is up $400 million, keeping in mind that about $166 million was shifted into this year by delays last year.


Maybe a more current view of refunds is to look at just the period of January through March to compare refunds to view the trend.  For Jan.-Mar., total refunds are up 214,127 and the amount of refunds is up $156 million.  Interestingly, today the number of electronic returns is almost twice the number of paper returns, but the increase in refunds is higher in paper than electronic.   


This recession has been full of surprises—and not the good variety.  So it is still too early to know how this fiscal year will play out.  The two big tax categories, income taxes and sales taxes, could be stabilizing, but any gains could be obscured by continuing increases in refunds.



With only 7 session days left, there is a lot to accomplish before the legislature can adjourn.  The FY 2010 Amended budget has not been settled at conference.  The FY 2011 General Budget must be passed by both bodies and settled in conference as well.  Two important pieces of the revenue side of the FY 2011 budget, HB 307 and HB 1055, must also be passed in order to produce a balanced budget.


Additionally, some important pieces of legislation hang in the balance.  If any legislation to address transportation issues is to pass, it appears it will be the product of a conference committee of an earlier bill, HB 277.  Putting together an answer to the future transportation funding needs of Atlanta and all of the state has not happened over the past three years so far. 


The Governor’s proposal would have divided the state into 12 regions with each region holding a tax referendum in 2012.  Citizens in each region would vote on a 1% sales tax to fund a specific list of transportation projects within the region.  A conference committee is currently trying to craft a bill satisfactory to both Houses.       


If you would like additional information regarding a specific piece of legislation, you may access the Georgia General Assembly website at http://www.legis.ga.gov/ and enter the specific bill number in the top right hand corner of your screen. 


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