State tax collections take a dive in January

ATLANTA - Georgia's tax collections plummeted in January, a sober sign for lawmakers who are wrestling with the state budget and looking for cash to hand Georgians an election-year tax cut.

State money managers reported Friday that revenues for January were down 7.1 percent in January from the same month the year before, a drop of $141 million. For the fiscal year, revenues are up a meager 2 percent. That's below the growth needed to meet state budget projections for the current fiscal year.

``Right now we're running a little bit behind where we need to be,'' acknowledged state fiscal economist Kenneth Heaghney, of Georgia State University.

Most troubling for economists is a 7.7 percent slide in individual income tax collections in January. While sales taxes have been sluggish in recent months, income taxes in the state have remained fairly stable.

Heaghney said that it's too soon to know whether the dip is due to a cutback in things like year-end bonuses or if it's more symptomatic of a broader slowdown in the labor market.

Another warning sign: unemployment rose in Georgia in December, the last month for which figures were available. The state Labor Department reported that it jumped to 4.6 percent, up from 4.2 percent the month before.

Sales tax collections were down 1.8 percent in January. For the year, they have ticked up just 1.1 percent.

Heaghney said the drop has been driven in large part by the housing market slowdown. The sale of construction equipment and home furnishings have both taken a dive, he said.

Automobile sales are also down as consumers cut back on discretionary spending.

An open question is whether the stimulus package President Bush appears poised to sign will pump life back into the economy by putting more cash into the hands of consumers.

The news comes amid calls for tax cuts within the GOP that would slash even more money flowing into state coffers. House Speaker Glenn Richardson proposes eliminating the school portion of property taxes.

Gov. Sonny Perdue is pushing again for a $142 million tax cut for upper-income senior citizens as well as an elimination of the state ad valorem tax on their property and cars.

Perdue spokesman Bert Brantley said Friday that there were no plans to scrap the tax cut proposals. Perdue believes the senior tax cut, in particular, will stimulate the economy, Brantley said.

``It's one month,'' he said. ``There are things that can happen in one month that can be made up in a future month.''

The state has a healthy $1.5 billion reserve fund, which could come in handy if the downturn continues.

``We're going to watch and see what happens,'' he added.

The state's fiscal year runs from July 1 to June 30.

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On the Net:

Georgia Department of Revenue: www.etax.dor.ga.gov