ATLANTA — Georgia could have more than $5 billion in surplus revenue after the just-concluded budget year, following another big month for tax collections in June.
The state Revenue Department announced Friday that it collected more than $33 billion in taxes in the year ended June 30, up 23% from about $27 billion the year before.
Georgia planned to spend more than $54 billion in the just-ended budget year, including federal money, lottery proceeds, and other fees and taxes that state agencies collect. Lawmakers boosted that number by $4.5 billion during a midyear budget revision that included bonus payments and pay raises for state employees and teachers, but will still substantially undershoot total revenue for the year.
Final numbers won't be clear until the state closes it books on the budget year, which usually happens around Labor Day.
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 August, and Democratic gubernatorial candidate Stacey Abrams has been calling 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 savings 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 that 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. She has said that the state's revenue position is so strong that she's willing to risk spending part of the surplus to pay for Medicaid expansion, further teacher pay raises and other priorities.
But Republicans 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.
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.