Showing posts with label georgia tax revenue. Show all posts
Showing posts with label georgia tax revenue. Show all posts

Thursday, August 13, 2020

How bad is Georgia hurting? State receives first $85 million installment of $1.1 billion loan request for unemployment trust fund


In June, the Tax Foundation published a study of state unemployment insurance trust funds. 
Georgia ranked at #21 out of 50. Since then, the picture has continued to deteriorate.
Map Source: Tax Foundation

Before March, Georgia looked to have one of the more solvent unemployment insurance trust funds. 

That is no longer true, as Georgia is receiving an $85 million loan to replenish its unemployment trust fund, which is quickly running out of cash as the state’s insured unemployment rate remains elevated.

The funds are the first installment of a $1.1 billion request made to the U.S. Department of Treasury by Governor Kemp, as reported by The Center Square

Figures from the most recent Unemployment Insurance Weekly Claims report published by the U.S. Department of Labor shows that 633,988 people in Georgia were receiving unemployment insurance benefits as of July 25, 2020, in contrast to the 25,618 people who received them a year ago. 

As of the end of July, the state’s insured unemployment rate stood at 14.4%. 

The Georgia Department of Labor announced that as of July 28, 2020, the trust fund balance was $585,483,621, down $1.962 billion, or 77 percent, from the March 24 balance of $2,547,476,454.  

Last month, Governor Kemp as the U.S. Department of Treasury to loan Georgia $85 million in August, $585 million in September, and $430 million in October. The current loan is the first installment related to that request. 

States that receive loans are expected to repay that money to the U.S. Treasury by either increasing state’s payroll tax on employers or from general funds. 

Interest is usually paid from the state’s general fund, and payroll taxes will most likely increase, potentially hurting workers and employers, Greg Georgia, director of the Center for Economic Analysis at Middle Georgia State University, told The Center Square. 

"When the state has to borrow money to supplement that fund now, that's probably general fund spending," George said. "So, it's just a way of spreading the pain to the broader taxpayer base." 

In June, the Tax Foundation conducted an analysis of the solvency of states’ unemployment insurance trust funds and noted that Georgia ranked 21st in its solvency level at 1.25. Any state with a solvency level of 1.0 or greater was deemed to have unemployment insurance sufficient to weather a recession. 

California ranked worse at number 50 with a solvency level of 0.21, while Vermont controlled the most solvent of the state trust funds with a solvency rank of 2.53. 

Despite the high number of claims being paid weekly by the Georgia Department of Labor, there are still accusations that the department has failed to pay all claims dating back to the middle of March. 

The state says it has paid benefits on 92% of valid claims since March. 

“As additional claims are being filed, we have been able to maintain an impressive ratio of eligible claims filed to payouts,” said Labor Commissioner Mark Butler. “Record breaking payout rates represent a new standard for this department as we strive to better serve Georgians.”

Sunday, December 22, 2019

State of Georgia personal income increases, individual income tax revenues decline: All driven by changes in the Atlanta metro area

Personal income in the State of Georgia grew by 3.8% in the third quarter of 2019, the same growth rate as the nation.

State personal income totaled $515.06 billion compared to $510.258 billion in the second quarter of the year placing the state as ranking 19th in its personal income growth rate.

Since the third quarter of 2018, the state’s personal income has risen by more than 4.3%.

The increase occurs even as Georgia reports lower Individual Income Tax collections over the quarter.

In July, Individual Income Tax collections came in $72.5 million above the amount collected in July 2018. In August and September, Individual Income Tax collections came in below amounts for the previous year by -$58.3 million, and -$27.4 million respectively. 

Combined, Individual Income Tax collections decreased by -$14.2 million compared to the same period last year.

GDP growth driven by the Atlanta metro area

Newly released information from the U.S. Bureau of Economic Analysis (BEA) demonstrates how the state’s development is being driven by the Atlanta metro area.

Georgia is highly dependent on the Atlanta metro area for the state’s prosperity and suffers when growth in the Atlanta area slows.

In 2018, the Atlanta metro area’s real GDP (a measurement of all goods and services adjusted for changes in prices, either inflation or deflation) rose by 2.5% compared to 2.4% for the State of Georgia and 2.9% for the nation.

The previous year, the Atlanta metro area’s real GDP rose by 4.1% compared to the state’s 3.7% and the nation’s 2.4% growth rate.

Five-year growth rates

More evidence for the outsized role that the Atlanta metro area plays in the state’s growth comes from recently released county GDP numbers.

The Atlanta area’s real GDP rose by 21.6% in the most recent five-year period compared to a rise of 17.35% for the state.

Five of the six counties showing the greatest dollar growth in GDP are located in the Atlanta area, including Fulton, Cobb, Gwinnett, DeKalb, and Clayton counties, each with real GDP growth greater than $2 billion over the past five years.

The only other county in Georgia with GDP growth of more than $2 billion was Chatham County, part of the Savannah metro area.

Fulton County was responsible for the largest GDP in the state, at $152.3 billion and recorded a 24.42% real GDP growth rate since 2013.

Georgia has 159 counties, the most of any state east of the Mississippi River, and Fulton County’s GDP exceeds the combined GDP of 144 of those 159 counties.

Monday, June 24, 2019

Georgia keeps adding jobs, but lower paying ones

Georgia added 5,900 jobs over the first four months of 2019, and an additional 2,600 in May, according to preliminary seasonally adjusted employment statistics from the U.S. Bureau of Labor Statistics.

If you graph out the results, as shown below, the job numbers look positive, if a bit sluggish compared to previous years. All in all, a bit of a slowdown and perhaps a "leveling-off" but not a decline.

Georgia Nonfarm Jobs, January 2018 to May 2019, seasonally adjusted

Source: U.S. Bureau of Labor Statistics

Look closer under those numbers, and the statistics are both more revealing and less positive for the state’s economy.

Higher Paying Industries Losing Workers

In 2018, the industries with the highest average salaries in the state were Information ($96,810), Financial Activities ($84,636), and Wholesale Trade ($76,681).

These are also the three industries posting the largest numerical declines for the first third of the year.
Information jobs have declined by 3,600, Financial Activities by 1,700, and Wholesale Trade jobs by 3,200.
Georgia Information Sector Employment

Georgia Financial Activities Sector Employment

Georgia Wholesale Trade Sector Employment

Preliminary data for May does not change the picture significantly. 

The Information sector added 100 jobs in May, Financial Activities added 900 jobs, and Wholesale Trade added 100 jobs. Despite preliminary indications of job increases, all three industries remain below their levels at the end of December when seasonal factors are excluded from the data.

Job Growth in Lower Paying Industries

In contrast, the Leisure and Hospitality industry has added the most jobs in the first four months, gaining 3,100 positions followed by Retail Trade with 2,500 net new jobs. 

The two industries are among those with the lowest average pay in the state. In 2018, Leisure and Hospitality jobs in Georgia averaged $20,602 while Retail Trade jobs averaged $31,093.

In May, Retail Trade added another 600 jobs, while the Leisure and Hospitality industry lost 300, according to preliminary data.

Georgia Retail Trade Employment
Georgia Leisure and Hospitality Employment

One bright spot is the growth in Education and Health Services in the state. For the first four months, the sector grew by 7,900 jobs with an additional 1,100 jobs added in May.

The Education and Health Care sector sits in the middle of the pay range by industry with salaries in the sector averaging $52,251, just below the state average of $53,543 for all nonfarm jobs.

Lower Pay Results In Lower Spending and Tax Revenues

Lower incomes results in lower consumption, which ultimately feeds back into lower government revenues through sales taxes.

If the state does not experience a rebound, not only in the number of jobs created but also in the salaries associated with the new jobs, then Georgia will have greater difficulties raising revenue in the future year.