State tax collections drop amid tax cut talks

ATLANTA - Georgia lawmakers scrambling to patch together a budget and a deal to cut taxes were handed some dismal news on Thursday, as state money managers reported tax collections are down again.

Revenues dropped 1.6 percent in March from the same month last year, a decline of $19 million. For the fiscal year that ends June 30, revenues are up a meager 1.6 percent. That's below the rate needed for Georgia to meet its budget for the year and makes it increasingly likely that the state will have to dip into reserves to stay afloat.

Gov. Sonny Perdue has already ordered state lawmakers to slash $245 million in spending from the fiscal year 2009 budget. The new figures could prompt him to demand even more spending cuts in the $21.2 billion spending plan.

Perdue spokesman Marshall Guest said Thursday there have not been discussions of further reducing the state's revenue estimate to mandate less spending. Perdue is traveling in China this week on a trip to promote economic development.

The gloomy fiscal news comes on the eve of the final day of the legislative session. State lawmakers are frantically negotiating the final details of the spending plan.

But the biggest stumbling block at the Capitol is a disagreement over competing tax cut proposals. The Senate wants to reduce incomes taxes by 10 percent over five years. The House is pushing to eliminate the car tag tax in two years. The two plans together would ultimately remove $1.7 billion from state coffers.

Perdue has suggested the state can't afford either proposal as it skates into economic uncertainty and has accused fellow Republicans of playing politics with the state's fiscal health.

Guest said the revenue numbers had been released just before the session's end because Senate Appropriations Chairman Jack Hill had asked for them.

'We wanted him to have the most up-to-date information,' he said.

The report from the Department of Revenue shows income taxes were down 2.1 percent in March. State economist Kenneth Heaghney said that drop is being driven, in part, by a rise in state income tax refunds for the month. More residents are filing online and the returns are being processed more rapidly in advance of the April 15 filing deadline, he said.