The headline number from the governor’s office looks pretty good: Deal: January revenues up 10.4 percent.
Georgia’s revenues in January totaled $1.73 billion, substantially higher than the $1.57 billion in 2012.
A few strong months like that will a) be a signal of a more robust recovery for the state and b) alleviate some pressure on the state budget.
But the details of the increase leave plenty of room for caution and concern.
Individual income tax collections leaped by $143 million in January compared to January 2012. That’s a 16.3 percent increase. While that suggests that total wages in the state are higher this year than last, it’s likely that a number of variables are exaggerating the increase. I’d look for a much more moderate increase in the next few months.
Sales and use tax collections in January were almost precisely flat compared to a year ago. Gross collections declined very slightly, while the state’s net sales and use tax was up by less than one-tenth of 1 percent.
Given the current rate of inflation, we’d expect truly flat consumer spending to have boosted the sales tax revenue by about 2 percent. This apparent decline in inflation-adjusted spending is possibly due to the end of the payroll tax cut of the last two years.
The governor’s press release also focuses on corporate income tax revenue, which was up dramatically in January compared to last year. But, at $20.8 million, corporate income taxes accounted for only about 1.2 percent of state revenues in January. Individual income taxes and sales and use taxes account for the bulk of the state’s revenues.
So far for the fiscal year, revenues are up 5.7 percent over last year, but we risk another hit to consumer spending if the sequester takes effect on March 1. I’ve written a little about this on my own blog. If those cuts take effect, we’re likely to see more or less immediate furloughs of some civilian employees of the defense department and cuts in payments to contractors. Those moves would certainly present a significant drag on consumer spending.