Wednesday, November 10, 2010

TN sales taxes grow by highest rate since 2007

By Erik Schelzig • ASSOCIATED PRESS • November 10, 2010 NASHVILLE, Tenn. (AP) -- Tennessee's latest revenue figures released Wednesday show monthly sales tax collections grew at their highest rate since April 2007 and that the state's general fund exceeded projections by $46 million through the first quarter of the budget year. Finance Commissioner Dave Goetz, who is leaving the administration of term-limited Democratic Gov. Phil Bredesen at the end of this week, said the improved economic performance could mean the cancellation of a call for agencies to cut spending by up to 3 percent. "That doesn't mean the new administration might not want to take some of those reductions and deal with that," Goetz said. "But the good news is that we might be able to leave them with the prospect of reasonable revenue growth." Republican Gov.-elect Bill Haslam takes office on Jan. 15. A spokesman did not immediately respond to a request for comment about the new administration's reaction to the quarterly revenue figures. Sales taxes, which account for two out of every three tax dollars collected in Tennessee, came in at $733 million in October, a 6.4 percent jump from the same month last year. The growth rate through the first three months of the budget year was 3.9 percent. October collections figures reflect economic activity in the previous month. General fund collections in the same quarter of last year were $88 million below expectations and they were $200 million short in the first quarter of 2008. But Goetz cautioned that it's unclear whether the performance so far this year can be sustained. "We don't know yet," he said. "Three months is three months." The State Funding Board in December set annual revenue estimates at the lowest end of forecasts presented to the panel by five economists. The board is made up of Goetz and the state's three Republican constitutional officers. Comptroller Justin Wilson said the panel "did the best we could with the information we had." Secretary of State Tre Hargett said the low-end estimates put the state in a better position for recovery. "I would certainly always err on the side of conservatism and making sure we don't spend money we don't have," he said. "It would be a much better problem to realize later on that we're doing better than we thought."

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