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Notes From the Senate
Monday, 12 September 2011

September 12--  Senator Jack Hill of Reidsville discusses state revenues in his "Noted From the Senate" report today.

AUGUST REVENUES CONTINUE POSITIVE TREND

August state revenues continued the positive trend this fiscal year with a 9.1% increase overall for the month over August of 2010.  Again this month, as in July, very positive numbers in individual income tax collections, 13.4%, led the way.  Individual collections, which include most small business filings, totaled $707.3 million, an increase of $83.5 million for the month.

 

Sales Tax collections, about one third of state revenues, were back up by 3.4% showing a net of $433.3 million for the month, an increase of $14.3 million.

 

Motor Fuel Taxes continued to reflect the higher prices at the pump with the 4% sales tax showing a 16.3% increase on collections totaling $49.0 million, an increase of $6.8 million.  You know that is true because the excise tax collections, a flat .075 per gallon, declined by $806 thousand to a total of $37.3 million for the month.  To sum up the transportation infrastructure dilemma, the state took fuel taxes for roads and bridges, a total of only $86.4 million.  Protracted out to a year's collections, you can readily see Georgia will have considerably less than a billion dollars to spend on roads and bridges statewide.

 

Corporate tax collections continued the negative trend at minus $1.4 million for the month, meaning the state paid out more than they received for the month.

 

Among the "small" tax areas, one significant change was a large, 30.7%, increase in cigarette tax collections due, according to the department, to the addition of two newly licensed cigarette distributors from a neighboring state as well as a change in ownership in an existing distributor.

 

AFTER TWO MONTHS, SOME TRENDS EMERGE

As month two of the 2012 Fiscal year ends, while not a quarter, still, some trends are emerging and some explanations inside the numbers give us insight.  Overall, revenues are up 8.2% or $191.6 million Year To Date (YTD).  This number is a little deceiving as the numbers are analyzed further here.  The main reason for this increase is Individual Income Taxes, up 17.6% YTD or $204.2 million up.  As you can tell, this total is more than the aggregate collections, so the rest of the collection areas are negative by some $13 million.

 

The big number difference in YTD individual collections has to do with refunds.  The number of refunds is down some 83,166 from YTD FY 2011 but the total dollars reduced is -$91.0 million, about half of the total increase for the year so far.  Income tax Payments are about the same number as last year but the dollar amount is up some $71.8 million, an encouraging trend.

 

SALES TAXES-YEAR TO DATE AND INSIDE THE NUMBERS

FY2012 Sales Tax collections are up only 1.1% YTD, an increase of only $9.4 million on collections of $879.8 million. This figure may adjust upward in percentages later due to possibly more accurate reflections of local distribution month by month.  Within categories, the top four categories of sales tax collections by percentage were all positive.  Food, up 7.6%, General Merchandise, up 1.4%, Utilities, up 6.9% and Retail Trade, up 7.0%  Other categories positive YTD were Accommodations, 3.2%, Automotive, 2.8%, Home Furnishing up .4%, and manufacturing, up 2.3%.  The only negative category was Construction at -16.2%.

 

The rising price of gasoline and diesel has driven the 4% tax up so that as of May 1, 2011, the tax per gallon based on 4%, was .129 cents per gallon compared to a year ago when the rate was .104 per gallon.  The price would have driven the tax up again in July for the regular tax setting time, but the Governor froze the rate at the May rate and the Legislature just ratified that action in the Special Session.  For the year Fuel Tax Revenues are up $10.3 million on revenues of $172 million after two months.

 

The state usually has one positive month a quarter on Corporate Tax collections, so after two months, it is not surprising to have a negative total, $44.5 million, but we have already had a small positive month this quarter.  Inside the numbers there is reason for continuing concern that the negative numbers reflect both the economy and the carry-forward nature of losses against companies' bottom line.  In FY2012, Corporate Tax Refunds are up $55 million or 181% while Corporate Tax Payments, including estimated payments, were up only $11 million.  Other categories including S-Corp Tax collections were down a half million dollars.

 

So after two months, the results are certainly ok at first glance, up 8.2%, but a more reflective view removing a one-time refund decrease in July, would indicate an increase rate more like 3.6%.  But maybe in this world, that would be pretty good news as well. 

 

 
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