Friday, December 09, 2022

Georgia likely to run multi-billion budget surplus again

ATLANTA ( Associated Press) — After another big month for tax collections in June, Georgia could have more than $5 billion in surplus revenue after the recently ended budget year.

The state revenue department announced Friday that it collected more than $33 billion in taxes for the year ended June 30, up 23% from nearly $27 billion a year earlier.

Georgia plans to spend more than $54 billion in the recently ended budget year, which includes federal funds, lottery proceeds, and other fees and taxes that state agencies collect. Lawmakers raised that number to $4.5 billion during a mid-year budget revision that included bonus payments and wage increases for state employees and teachers, but would still significantly reduce total revenue for the year.

The final numbers won’t be clear until the state closes the books on the budget year, which usually happens around Labor Day.

An emerging bank account could make it possible for the state to cut taxes further or expand services. Republican Gov. Brian Kemp has already extended a temporary exemption on gas taxes until mid-August, and Democratic gubernatorial candidate Stacy Abrams has called on Kemp to extend the gas tax holiday until the end of the year. Kemp can make that move without legislative approval as long as lawmakers later ratify it.

The state would need to transfer about $150 million a month from its savings to sustain road-building efforts.

Georgia ran a surplus of $3.7 billion in the 2021 budget year, filling its rainy day fund to the legal limit and leaving $2.3 billion in additional unspecified surplus, which Kemp used to pay $1.1 billion in addition to gas tax payments. for giving income tax refund. Holiday.

Abrams has made the Medicaid health insurance program a top priority for uninsured adults. It has said the state’s revenue position is strong enough that it is willing to spend part of the surplus to pay for Medicaid expansion, further teacher pay increases and other priorities.

But Republicans may be cautious as they set a major income tax cut to begin on January 1, 2024. Changing Georgia’s income tax from a system with a top rate of 5.75% to a flat tax of 5.49% with a lower bottom bracket could shun $450 million in tax revenue. After that, the measure calls for the tax rate to drop by one-tenth of 1% every year, reaching 4.99% by 2029, until total revenue stalls.

Georgia’s budget pays to educate 1.7 million K-12 students and 435,000 college students, house 47,000 state inmates, build 18,000 miles (29,000 kilometers) of highway, and care for more than 200,000 people who are mentally ill. are ill, developmentally disabled or addicted to drugs or alcohol. ,

A few hundred million of the additional money will go to the State Rainy Day Fund, which by law includes a 15% tax collection from the previous year. But much of it will end up as unspecified surplus, basically cash Kemp and MPs can spend as they wish.

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