Georgia likely to again run multibillion budget surplus
Georgia is still in the money, with tax collections on track to deliver another big surplus in its state budget.
The state has already collected roughly $2 billion more in general tax revenue than it’s on track to spend in the budget year that ends June 30, according to figures released Wednesday.
Plus, Georgia will bank another month of tax collections before it closes the books on the 2022 budget year, which could add another $2.5 billion to the surplus.
The bulging bank account could make it possible for the state to further cut taxes or expand services. Republican Gov. Brian Kemp has already extended a temporary waiver on gas taxes through the middle of July, and Democratic gubernatorial candidate Stacey Abrams on Tuesday called on Kemp to extend the gas tax holiday through the end of the year. Kemp can make that move without legislative approval as long as lawmakers later ratify it.
That would require the state to transfer roughly $150 million a month from its saving to maintain roadbuilding efforts.
Georgia ran a $3.7 billion surplus in the 2021 budget year, filling its rainy day fund to the legal limit and leaving $2.3 billion in additional undesignated surplus Kemp has used to give income tax refunds worth $1.1 billion, in addition to paying for the gas tax holiday.
Abrams has made expanding the Medicaid health insurance program to uninsured adults a top priority.
But lawmakers could be cautious because they have set a big income tax cut to begin on Jan. 1, 2024. Changing Georgia’s income tax from a system with a top rate of 5.75% with lower brackets below there to a flat tax of 5.49% could forgo $450 million in tax revenue. After that, the measure calls for the tax rate to fall one-tenth of 1% each year, reaching 4.99% by as early as 2029, unless overall revenue stalls.
Revenue figures have been hard to follow during the spring because Georgia delayed the deadline to file income taxes in 2021 into May because of the pandemic. But that smoke cleared with the May revenue report, showing tax collections running 24% ahead of this time last year and more than 10% ahead of what’s needed for a 2022 budget. That’s even after Kemp and lawmakers added nearly $3 billion in spending, mainly by paying more to employees and K-12 teachers and increasing other spending on education.
Georgia’s budget pays to educate 1.7 million K-12 students and 435,000 college students, house 47,000 state prisoners, pave 18,000 miles (29,000 kilometers) of highways and care for more than 200,000 people who are mentally ill, developmentally disabled or addicted to drugs or alcohol.
A few hundred million of the extra money will go into the state rainy day fund, which by law contains 15% of tax collections from the previous year. But most of it will end up as undesignated surplus, basically cash Kemp and lawmakers can spend as they please.