FY 2010—A YEAR TO REMEMBER AND FORGET

With the June Revenue numbers in, Fiscal Year 2010 drew to a close and the curtain fell on a forgettable year that saw state revenues decline by some $1.7 billion dollars in this fiscal year alone. The repercussions rippled through state government as most agencies saw an additional 9% or more reduction to follow the previous year’s 9-10% cut with a number of agencies having even larger cuts. This year saw real cuts in education-cuts that could not be made up with federal AARA funds as in the previous year. June total revenues were up slightly at positive 3.8% with individual income taxes up 9.3% and net sales taxes at a negative 8.4%. Total gasoline taxes were up 7.4% and corporate income taxes were up 32.7% or $38 million dollars for the month.

You won’t see anyone doing handstands until we know how much in tax refunds are still to be paid out in July and August. In other words, a year ago, refunds were delayed and that created a hole to be paid out in FY2010 in July and August. That total ran about $160 million a year ago. Until we know how much DOR is holding back to be paid after July, we won’t know how deep that hole is as well.

But maybe there is a clearer view in quarterly and yearly figures. The trends for the last quarter of the fiscal year do show encouraging signs. For example, total receipts for the 4th quarter were negative by only $82.5 million or -2.0%. Individual Income Taxes were down about -5.2%, less than half of the previous year’s rate. Net Sales taxes (going to the state only) were negative at only -1.8% for the quarter.

Yearly numbers were grim as the first paragraph pointed out above. In fact, only two months of the year were even as high as five years ago for the same month. The charts that you can access at https://etax.dor.ga.gov/servlink/june Press Package 2010 pdf graphically show how dismal this year has been.

Total revenues collected in FY 2010 by the Revenue Department were $14.19 billion, at a level between the 2004 and 2005 revenue levels. Keeping in mind that the state has increased in population by more than 500,000 since 2005. The difference between what the state generated in FY2010 and a year ago totaled a minus $1.42 billion dollars just in tax collections. That problem is what has prompted the severe budget cutting along with the use of federal funds, fee increases and other funds, including the hospital revenue fee, just to balance the $17.8 billion budget.

Individual Income Taxes, the largest category, were down from a year ago by $779 million dollars or an even -10.0%. Sales Tax revenues, one third of the total, were off by -10.6% or $563 million. So the top two categories fell over $1.3 billion between the two. Local Sales Tax collections were up slightly at 0.1%.

The two categories of motor fuel taxes, excise and sales taxes, were down by “only” -3.8% or $32.5 million dollars, actually an improvement over the past two years. But the total funds taken in for the Department of Transportation total only $828.6 million dollars, down from one billion just 3 years ago.

Corporate Income Taxes are a small category, accounting for only 4.8% of the total in 2010 for a total of $684.7 million dollars decreasing by a minus 1.4% for the year. Tobacco taxes fell 1.2%, alcoholic beverages were up slightly at 0.7%.

STATE FAILS TO MEET LATEST REVENUE ESTIMATE

The $128 million shortfall for the FY2010 year was made up of moving stimulus funds from FY2011, cancelling unneeded contracts, withholding final month allotments from some agencies and using part of the Shortfall Reserve.

REFUNDS—HARD TO SEE THE EFFECTS AT THIS POINT

Since we do not know at this juncture what income tax refunds are being held for payment, it is hard to make judgments about the numbers of refunds and the amounts but here is what we know: for FY2010, the total number of refunds is up considerably by 520,460 returns and showing a dollar value increase of $385.1 million in 2010.