ATLANTA (AP) - A top Republican lawmaker is casting doubt on whether Georgia’s taxpayers will see another income tax cut this year.
Senate Finance Committee Chairman Chuck Hufstetler of Rome said Friday that he doubts that the General Assembly will further reduce the top rate on Georgia’s state income tax from 5.75% to 5.5%
“I don’t see the math there right now without some changes to the budget to do it,” Hufstetler said while speaking at a conference sponsored by the Georgia Budget and Policy Institute.
Legislators cut the top income tax rate from 6% to 5.75% in 2019 as part of a package of changes meant to prevent Georgia’s state income tax collections from increasing sharply after changes to the federal income tax. However, growth in income tax collections has drastically undershot forecasts since the changes took effect.
State economist Jeffrey Dorfman told lawmakers during budget hearings Tuesday that Georgia’s changes appear to have decreased revenue more than expected.
“We did a good job of giving the windfall back to taxpayers,” Dorfman said. “It turned out we did a little better job than we thought we were doing.”
When the first phase of the tax cut was passed, lawmakers envisioned the additional quarter-percentage decrease to 5.5% this year. House Speaker David Ralston, a Blue Ridge Republican, has come out in favor of the cut. Analysts estimate the state would forgo $500 million to $550 million in revenue from another cut.
But with revenues already lagging after the first cut, Gov. Brian Kemp ordered midyear budget cuts this year, with plans for cuts to get deeper next year. Some agencies say less money will mean service cuts.
Although the Republican Kemp has said he’s open to negotiations with lawmakers, he didn’t include the tax cut in his proposed budget. Instead he’s focused on fulfilling his campaign promise to give a pay raise to teachers. After a $3,000 raise last year, another $2,000 this year would cost $376 million for K-12 and preschool teachers.
Tax cuts are opposed by most Democrats, who are rallying to protect state services.
“It absolutely does not seem like the right time to have an income tax cut,” said Rep. David Dreyer, an Atlanta Democrat, while speaking at Friday’s conference.
House Minority Caucus Chairman James Beverly, a Macon Democrat, also voiced opposition.
“In a word, no,” Beverly said. ___
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