By JEFF AMY – Associated Press
ATLANTA (AP) — Georgia posted a surplus of more than $6 billion in the fiscal year that ended June 30, meaning the next governor and state lawmakers could spend or give back billions.
State Accounting, in a Friday reportsaid Georgia had a $6.37 billion surplus even after spending $28.6 billion on state taxes and fees in the 2022 budget year. state increased by 22%.
Even after filling its rainy day fund to the legal maximum, Georgia has $6.58 billion in “unearmarked, undesignated” surpluses — money that leaders can spend however they want.
Some of the money is already on the way, with the state likely to transfer more than $1 billion to pay for roads, bridges and other transportation projects. That would offset the state’s decision in March to waive its gasoline tax of 29.1 cents per gallon and its diesel tax of 32.6 cents per gallon. Republican Governor Brian Kemp has repeatedly extended tax breaks since then, lawmakers must ratify a decision when they return in January.
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Kemp, running for re-election against Democrat Stacey Abrams, has plans on an additional $2 billion of the surpluspledging to provide an additional $1 billion in state income tax refunds, as well as spending $1 billion to renew a long-dormant tax break for homeowners.
“The governor will continue to leverage state resources to help our state’s families fight 40-year high inflation caused by failed Democratic leadership in Washington,” Kemp’s spokesperson said, Tate Mitchell.
Abrams also wants to grant a billion dollar income tax refundalthough it would limit it to households earning less than $250,000 a year. She proposes spending $1.9 billion of the surplus over four yearsfunding a big increase in teacher pay and an expansion of the federal state Medicaid program to provide health insurance to the poorest adults.
Republicans resist spending excess money on continuing programs, and Kemp has attacked Abrams’ spending proposals as unsustainable. He says she couldn’t keep her promises without raising taxes.
“The numbers don’t lie,” Abrams campaign spokesman Alex Floyd said. “Thanks in part to federal legislation passed by Democrats in Georgia, we have the money to invest in education, health care and small businesses, all without raising taxes.”
Republican leaders clung to the pessimism about state revenues forged during the Great Recession, when steep declines in income and an unwillingness to raise taxes led to painful cuts in state services. Kemp said in a Sept. 12 campaign appearance that “unfortunately, growth has slowed for two quarters in a row, and many are predicting even tougher times in 2023.”
Part of their concern is that a sharp rise in interest rates to fight inflation could slow the economy or tip it into recession. There is also a state income tax reduction effective January 1, 2024. It will reduce Georgia’s current tax — with a top rate of 5.75% and lower brackets below — to a flat tax of 5.49%. It would cost about $450 million in the first year, and budget writers are due to start reporting on it next year.
But revenues show few signs of slowing so far, with a 5.5% lead over forecast in the first two months of fiscal year 2023. Income and sales taxes are ahead more than 10% over last year, supported in part by wage and price inflation, and Georgia would be even further ahead if it resumed fuel tax collection.
The state also has other funds in reserve. The rainy day fund to cover budget shortfalls remained filled within its legal limit of 15% of tax revenue, rising from $4.29 billion to $5.24 billion.
And the Georgian lottery also continued to accumulate a surplus. That could bolster calls to expand middle school and preschool aid programs funded by lottery proceeds. The lottery is legally required to keep half of the $1.47 billion annual proceeds in reserve to cover any declines in gaming revenue. But that fund now holds an additional $1.1 billion on top of what is required.
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