Georgia’s state tax revenues swooned by $1 billion in April thanks to coronavirus-related disruptions, as the number of COVID-19 infections in the state surpassed 30,000 confirmed cases and 1,300 deaths on Wednesday.
The revenue figure is a grim omen as House lawmakers prepare to begin new hearings Thursday on the upcoming year’s budget. Agencies have been mandated to propose 14% reductions to their budgets, which would cut more than $3.5 billion from the planned $28 billion in state revenue.
The news came as the state’s largest school district dialed back reopening plans and the toll at long-term care facilities continued to rise.
April is normally the largest revenue month in Georgia, thanks to income tax payments. But with the state delaying its income tax deadline to July 15 along with the federal government, much of that money didn’t arrive. Individual and corporate income tax payments fell by about $700 million over last year, after accounting for refunds that also weren’t paid because people delayed filing returns.
The numbers will blow a hole in the budget for the year ending June 30. House Appropriations Committee Chairman Terry England, an Auburn Republican, said this year’s shortfall could be a billion or more, despite earlier cuts, and will be paid from the state’s $2 billion-plus in rainy day savings.
England said that income tax payments in July are likely to be counted in revenue for this year or used to replenish that state savings account. But there are other key questions, like whether Congress will borrow money and give it to states to plug budget holes. Also, ongoing corporate tax payments fell sharply in April, while ongoing individual income tax withholding held up. England said he’ll be waiting for additional revenue numbers next month before making any final guesses about where revenue is going.
“The tale of the tape will come in early June,” England said.
Danny Kanso, a budget analyst with the liberal-leaning Georgia Budget and Policy Institute, said the decline in ongoing corporate tax payments probably mean those numbers will stay low for some time as business profits dive.
“I don’t really expect we can get a lot of that back,” he said.
Kanso said he’s also going to be watching next month to see if ongoing individual income tax withholding declines.
“The key thing is going to be how many people are going to be unemployed and how is that going to affect our individual income tax?” Kanso said.