Huge surplus leaves Georgia with $6.6B in cash to spend

ATLANTA (AP) — Georgia ran a surplus of greater than $6 billion within the price range 12 months that ended June 30, which means the state’s subsequent governor and lawmakers may spend or give again billions.

The State Accounting Workplace, in a Friday report, mentioned Georgia ran a $6.37 billion surplus even after spending $28.6 billion in state taxes and costs within the 2022 price range 12 months. Whole state basic fund receipts rose a whopping 22%.

Even after filling its wet day fund to the authorized most, Georgia has $6.58 billion in “unreserved, undesignated” surplus — money that leaders can spend nevertheless they need.

Some cash is already spoken for, with the state more likely to switch greater than $1 billion to pay for roads, bridges and different transportation initiatives. That will make up for the state’s determination in March to waive its gasoline tax of 29.1 cents per gallon and its diesel tax of 32.6 cents per gallon. Republican Gov. Brian Kemp has repeatedly prolonged the tax breaks since then, a transfer lawmakers should ratify once they return in January.

Kemp, working for reelection towards Democrat Stacey Abrams, has designs on a further $2 billion of the excess, pledging to offer one other $1 billion in state revenue tax rebates, plus spending $1 billion to resume a long-dormant property tax break for owners.

“The governor will proceed to leverage state assets to assist households in our state combat by 40-year-high inflation brought on by failed Democratic management in Washington,” mentioned Kemp spokesperson Tate Mitchell.

Abrams additionally needs to offer a $1 billion revenue tax rebate, though she would limit it to households making lower than $250,000 a 12 months. She proposes spending $1.9 billion of the excess over 4 years, financing an enormous enhance in trainer pay and an enlargement of the state-federal Medicaid program to supply medical insurance for poorer adults.

Republicans resist spending surplus cash on persevering with packages, and Kemp has attacked Abrams’ spending proposals as unsustainable. He claims she wouldn’t be capable to preserve her guarantees with out tax will increase.

“The numbers don’t lie,” mentioned Abrams marketing campaign spokesperson Alex Floyd. “Thanks partially to federal laws handed by Georgia Democrats, we now have the cash to make investments in training, well being care and small companies — all with out raisings taxes.”

Republican leaders have held quick to pessimism about state income solid within the Nice Recession, when steep income drops and an unwillingness to lift taxes led to painful cuts in state providers. Kemp mentioned at a marketing campaign look on Sept. 12 that “sadly, progress has slowed two quarters in a row, and plenty of are predicting even rougher instances in 2023.”

A part of their concern is {that a} steep rise in rates of interest to fight inflation may gradual the economic system or tip it into recession. There’s additionally a state revenue tax lower starting Jan. 1, 2024. It can cut back Georgia’s present tax — with a prime fee of 5.75% and decrease brackets beneath — to a flat tax of 5.49%. That will price about $450 million within the first 12 months, and price range writers should start accounting for it subsequent 12 months.

However income to date exhibits few indicators of slowing, working 5.5% forward of plan by the primary two months of the 2023 price range 12 months. Each revenue and gross sales taxes are working greater than 10% forward of final 12 months, buoyed partially by wage and value inflation, and Georgia could be even additional forward if it resumes amassing gas taxes.

The state additionally has different cash in reserve. The wet day fund to cowl price range shortfalls remained crammed to its authorized restrict of 15% of tax receipts, rising from $4.29 billion to $5.24 billion.

And Georgia’s lottery continued to pile up a surplus as effectively. That would bolster calls to increase the school support and preschool packages financed by lottery proceeds. The lottery is legally required to maintain half of yearly $1.47 billion proceeds in reserve to cowl attainable decreases in playing income. However that fund now holds a further $1.1 billion above what’s required.

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Observe Jeff Amy on Twitter at http://twitter.com/jeffamy.