Georgia’s decision to delay processing tax year 2020 individual returns helped lead to a net tax collection of nearly $2 billion in February.
Georgia followed the Internal Revenue Service’s guidance of not accepting and processing 2020 returns until Feb. 12. The deferment led to a delay in tax refunds, which resulted in higher than usual individual income tax collections, Gov. Brian Kemp’s office said in a news release.
Despite a double-digit percentage drop in payroll taxes in January and a dip in overall General Fund collections, Virginia Gov. Ralph Northam said the state’s revenue remains stable.
The state’s January 2021 revenue report showed payroll withholding taxes down 12.6% for the month compared with last January, but the state said the decrease was expected because of one less deposit day compared with a year ago. The report said collections of the sales and use taxes, showing December sales, rose 5.6% in January, and the combined December and January receipts rose 5.4% over the same time from a year ago.
State governments, including Tennessee’s, should expect revenue shortfalls because of the economic impact of the COVID-19 pandemic, according to an analysis released by Pew.
Revenue forecast predictions that predate the COVID-19 pandemic are out of date because of skyrocketing unemployment, regulations on businesses and restrictions on people leaving their homes. This negatively will affect income-tax revenue, sales-tax revenue, business-tax revenue and likely other minor sources of revenue.
In Tennessee, nonessential businesses have been closed, restaurants have been forced to only carry-out and delivery services and people are not allowed to leave their homes for nonessential activities.
Gov. Bill Lee and the Tennessee General Assembly sought to get ahead of the crisis by altering the state budget proposal when the crisis began. The new budget removed some initiatives and diverted funding from education, teacher-salary increases and other public-employee salary increases to fund efforts to combat COVID-19 and the rainy day fund.