Newton County commissioners will not have to cut their budget for the first time in four years, in part thanks to receiving $1.28 million more in insurance premium tax money, a little discussed revenue source.
In order to receive insurance coverage, people must pay a premium to their insurance company. Those premium payments are then taxed by the state, with revenues split between the state and local governments.
The insurance premium tax can be viewed as insurance companies' equivalent of a corporate income tax; however, unlike other corporations in the state, insurers are not taxed based on corporate net income, but on gross revenues from insurance premiums, according to a February 2006 policy brief by Georgia State University's Fiscal Research Center.
The state premium tax rate is 2.25 percent, while the local rate is 2.5 percent. Life insurance companies only have to pay a 1 percent local tax.
The state collects premium taxes on behalf of local governments and then distributes them back to local governments on a simple pro rata basis, said Lynn Partridge, a premium tax accountant with the Georgia Office of Insurance and Safety Fire Commissioner.
Because Newton County's growth (61 percent) greatly outstripped the state's (18.3 percent) from 2000 to 2010, the county received $1.28 million more in revenue this past year, a total of $3.43 million, after the results of the 2010 Census were used.
The majority of the county's cities received less premium tax revenue because they grew less than other areas of the state.
Partridge said the state disburses local insurance premium tax revenues on Oct. 15 of every year and this past year was the first year the 2010 Census numbers were used.
"Every time the Census changes, I've been here through two of them, it increases some of them and it decreases some of the cities and counties and that's when we get our most interest," Partridge said.