Economist: Effect of Stimulus Dollars Months Off

Federal stimulus dollars are starting to roll into Georgia. But it could be a while until the money helps the state’s economy. Funds from the American Recovery and Reinvestment Act are ramping up state projects like making buildings more energy efficient to building roads.

They’re creating jobs and that means more tax dollars. But it could be months until we see its effect on revenues.

"Part of it is the lag when the cash comes in and it shows up in paychecks and spending," said professor of Economics at Mercer University Roger Tutterow, "and then of course there’s a lag between when that occurs and the state actually gets their cuts and reflects it in their tax revenue collections."

Case in point, the Department of Transportation. It got $62 million in May, and the first of 41 projects just started last week--- workers began repaving a road south of Atlanta. The project allowed a state contractor to keep 25 employees and create 3 new jobs. DOT officials do expect the remaining 40 projects to begin this month.

Steep Drop in Feb. Tax Collections

Georgia tax collections took a nosedive in February.

State money managers reported Friday that revenues plummeted a whopping 34.8 percent, tumbling $336 million from the same month the year before.

Tax collections are down 7.3 percent for the fiscal year set that ends June 30.

Gov. Sonny Perdue already has ordered deep spending cuts to make up the state's widening budget gap.

He warned earlier this week that February's numbers would be grim. He said the state has seen a surge in Georgians filing tax returns earlier, which has meant the state has been sending more tax returns out the door.

(AP)

Millions in unclaimed tax rebates

Tax season is long over, but thousands of Georgians have yet to file their taxes, and that means no Economic Stimulus rebate checks for them either.

So the AARP is heading up an effort to get what they approximate at 50 million dollars in rebates into the state. It’s holding a 3 day blitz to sign up recipients with 25 offices around the state open to help.

The checks ranging from 300 to 600 dollars are part of the federal growth package approved earlier this year to combat a faltering economy. Tax payers must send their income tax return by October 15 in order to get the rebate.

For more information, go here, or call 1-877-926-8300.

Perdue suspends sample drug taxes

Gov. Sonny Perdue has suspended collection of taxes on free samples of prescription drugs, saying it conflicts with the tax exemption on prescription sales. The move comes in the wake of a 2001 court decision that contact lenses, available only with a valid prescription, are taxable to the manufacturer or distributor when distributed by them as free samples. Perdue's order also covers drug samples provided for clinical trials. He said taxing those puts the state at a disadvantage in attracting research and development activities to Georgia.

Democrats announce tax plan

Georgia Democrats are proposing a plan that allows counties that lower property taxes to tap into a 300 million dollar pool of education funding. The proposal would set aside 600 million from the state's reserve fund over the next two years for counties that reduce property taxes to use for educational purposes. The measures will face plenty of opposition in a Republican-run statehouse where lawmakers are already considering a range of other new tax plans. Lawmakers also unveiled a bipartisan push yesterday to make sure Georgians don't have to pay state income taxes on the stimulus checks they might receive from the federal government.

Perdue considers Richardson tax plan

Gov. Sonny Perdue says he has met with the economist behind House Speaker Glenn Richardson's plan to replace property taxes with a four-percent sales tax on goods and services, such as haircuts and legal counseling.

Perdue says he is interested in broadening the tax base, as this plan would do, and he understands property taxes are onerous. But, he stopped short of endorsing Richardson's proposal. He says he has many questions.

"This would be a huge departure," Perdue says. "We need to have to have the facts on exactly how it impacts [people]."

In addition, Perdue says he wants to make sure a sales tax would raise enough revenue alone.

Local officials across the state have criticized Richardson's plan. They fear they could lose money if the property tax were abolished.

Payroll company co-owner to federal prison

A former payroll company operator has been sentenced to six-and-a-half years in federal prison. 34-year-old Stephen Taylor of Canton was convicted of defrauding clients of more than four million dollars. Federal officials say Taylor cheated over 100 business owners by withholding taxes, but kept the money for personal use. Many owners that were defrauded were small business owners.

Taylor co-owned the company 20/20 Payroll Solutions, which had offices in Georgia, Texas and Alabama.