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Georgia tax revenues perk up as lawmakers grapple with cuts

In this file photo, cut stacks of $100 bills make their way down the line at the Bureau of Engraving and Printing Western Currency Facility in Fort Worth, Texas.
In this file photo, cut stacks of $100 bills make their way down the line at the Bureau of Engraving and Printing Western Currency Facility in Fort Worth, Texas. (AP2013)

ATLANTA – Georgia’s tax collections are improving even as lawmakers grapple with budget cuts brought on by previous shortfalls.

Gov. Brian Kemp announced Monday that tax collections rose 4.5% in January compared to the same month in 2019. Overall tax collections for the budget year, which began July 1, are now up $133 million, or nearly 1%.

That still leaves the state on pace to be far short of the $800 million in new revenue that Kemp and lawmakers projected for this year when they passed the budget last spring. But it’s a little good news as House members this week grind through the painful process of ratifying cuts that Kemp imposed earlier on state agencies. It could also brighten the picture for next year’s budget, which lawmakers will write in the next few months.

The state’s two main revenue sources both rose at faster rates than earlier in the budget year. Individual income taxes, which had flatlined after a 2019 cut to Georgia’s top state income tax rate, rose 4.3% in January, meaning year-to-date income tax collections shifted to positive for the first time, even though they’re still running far behind projections. Sales taxes, Georgia’s second-largest source of revenues, rose 4.6%, also outpacing what had been slower growth in earlier months.

It’s the second month of good news after months when revenues lagged despite low unemployment. If Georgia’s revenues had risen this rapidly in every month as in January, the state would be on track for a surplus. Instead, the Republican Kemp ordered many agencies to make cuts in this year’s budget, seeking to save about $200 million. He has proposed deeper cuts for the 2021 budget beginning July 1, seeking to reduce spending by about $300 million over what was originally planned this year. Kemp wants to give a $2,000 teacher pay raise next year, which would cost a projected $376 million.

Kemp was already projecting a revenue upswing, foreseeing growth of $410 million this year, but it would take a sharper recovery to substantially ease cuts. House members are poring through changes to this year’s budget this week and are expected to pass an amended spending plan as early as next week. But they have little room to maneuver with Kemp having already ordered agencies to hold down spending.

That doesn’t mean lawmakers aren’t still finding things they don’t like.

On Monday, with an appropriations subcommittee hearing from public safety agencies, state Rep. Andy Welch, a McDonough Republican expressed concerns about delays to a plan to open a transition center in Gwinnett County for teens being released from the Department of Juvenile Justice, saying that’s when youths are “vulnerable” and need the most support.

Rep. Scott Holcomb, an Atlanta Democrat, asked whether cutting open positions would increase overtime spending and hurt morale among already low-paid juvenile corrections officers.

Lawmakers pored through cuts in vacant state trooper spending, with Public Safety Commissioner Mark McDonough saying attrition would likely reduce trooper ranks in 2021.