The Easter bunny was good to Georgia last week as he brought us the news that March revenue collections were up from a year ago, marking the first monthly increase in revenues since November of 2008.
And although the increase was only $10 million -- a miniscule 1 percent above a year ago -- after 18 months of continuous declines in revenues, any increase is cause for celebration and especially for optimism.
So, why should we try and find optimism in such a small increase? After all, March is traditionally the second lowest month of the year for revenue collections and we’re still down 11.5% or $1.33 billion from the previous fiscal year.
Well, besides the aforementioned mental victory in ending 18 months of decreases, from February through June of each year revenues are greatly impacted by tax refunds being paid out by the state and how they compare to the year before.
Remembering back to last year, refunds by the state were late in being paid and some $166 million were not paid out until after July 1. Not only did this result in April, May and June totals appearing higher than they would have been had the refunds been paid in a timely manner, it also caused us to have to start the next fiscal year in a hole.
Because the amount of refunds affects revenues directly, it is useful to compare this year’s figures with last year’s. Even with the $166 million that was shifted into the current fiscal year, tax refunds have increased some 300,000 and the dollar amount is up $400 million. These figures are not surprising since the state and nation are in a recession and tax refunds are expected to be higher.
If we look specifically at the period of January through March of this year as compared to the same period last year, total refunds are up 214,127 and the amount of refunds is up $156 million.
Our hope, of course, is that the two big tax revenue categories, income taxes and sales taxes, are stabilizing and that any gains won’t be offset by increases in refunds.
Another reason for optimism as a result of March’s miniscule increase in revenues is the impact that the remainder of the current fiscal year- FY’10 (April, May & June) will have on next year’s budget (FY’11).
In January of this year when Governor Sonny Perdue set the revenue estimates for the amended FY’10 budget that runs through June, he based his estimates on the idea that Jan-June revenues would be the same as last year. With January and February coming in 9% and 10% lower respectively, even the slight increase in March is a welcome relief.
Because Gov. Perdue has said that he will make up any revenue shortfalls in the FY’10 amended budget by transferring stimulus money from the FY ’11 budget back to the FY ’10 amended budget, this could cause a double whammy on the FY ’11 budget.
For instance, if Gov. Perdue is forced to move $200 million out of FY ’11 into FY ’10, not only will the $200 million have to be replaced but the baseline that the FY ’11 budget was based on has to be reduced by another $200 million, creating a $400 million hole.
Add to that dilemma the fact that the Governor factored in a modest increase of 3.5% growth for FY’11 over that of FY’10 and the scenario becomes even more concerning.
So you can see why we are excited by a 1% increase in revenues for March- not only does the FY ’10 budget depend on it, but to an even greater degree the FY ’11 budget depends on it.
Carter can be reached at Coverdell Legislative Office Building (C.L.O.B.) Room 302-B, Atlanta, GA, 30334. His Capitol office number is 404-656-5109.
And although the increase was only $10 million -- a miniscule 1 percent above a year ago -- after 18 months of continuous declines in revenues, any increase is cause for celebration and especially for optimism.
So, why should we try and find optimism in such a small increase? After all, March is traditionally the second lowest month of the year for revenue collections and we’re still down 11.5% or $1.33 billion from the previous fiscal year.
Well, besides the aforementioned mental victory in ending 18 months of decreases, from February through June of each year revenues are greatly impacted by tax refunds being paid out by the state and how they compare to the year before.
Remembering back to last year, refunds by the state were late in being paid and some $166 million were not paid out until after July 1. Not only did this result in April, May and June totals appearing higher than they would have been had the refunds been paid in a timely manner, it also caused us to have to start the next fiscal year in a hole.
Because the amount of refunds affects revenues directly, it is useful to compare this year’s figures with last year’s. Even with the $166 million that was shifted into the current fiscal year, tax refunds have increased some 300,000 and the dollar amount is up $400 million. These figures are not surprising since the state and nation are in a recession and tax refunds are expected to be higher.
If we look specifically at the period of January through March of this year as compared to the same period last year, total refunds are up 214,127 and the amount of refunds is up $156 million.
Our hope, of course, is that the two big tax revenue categories, income taxes and sales taxes, are stabilizing and that any gains won’t be offset by increases in refunds.
Another reason for optimism as a result of March’s miniscule increase in revenues is the impact that the remainder of the current fiscal year- FY’10 (April, May & June) will have on next year’s budget (FY’11).
In January of this year when Governor Sonny Perdue set the revenue estimates for the amended FY’10 budget that runs through June, he based his estimates on the idea that Jan-June revenues would be the same as last year. With January and February coming in 9% and 10% lower respectively, even the slight increase in March is a welcome relief.
Because Gov. Perdue has said that he will make up any revenue shortfalls in the FY’10 amended budget by transferring stimulus money from the FY ’11 budget back to the FY ’10 amended budget, this could cause a double whammy on the FY ’11 budget.
For instance, if Gov. Perdue is forced to move $200 million out of FY ’11 into FY ’10, not only will the $200 million have to be replaced but the baseline that the FY ’11 budget was based on has to be reduced by another $200 million, creating a $400 million hole.
Add to that dilemma the fact that the Governor factored in a modest increase of 3.5% growth for FY’11 over that of FY’10 and the scenario becomes even more concerning.
So you can see why we are excited by a 1% increase in revenues for March- not only does the FY ’10 budget depend on it, but to an even greater degree the FY ’11 budget depends on it.
Carter can be reached at Coverdell Legislative Office Building (C.L.O.B.) Room 302-B, Atlanta, GA, 30334. His Capitol office number is 404-656-5109.