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KNOXVILLE, Tenn. — The December increase of 6.8 percent in state revenue collections was marked by strong growth in the excise and franchise taxes and a good increase in the sales tax, a University of Tennessee economist said Friday.

 Dr. Matt Murray of the UT Center for Business and Economic Research said excise and franchise taxes were up 23.3 percent and 37.6 percent, respectively, while sales tax collections increased 5.9 percent.

 “We had very strong growth in the corporate excise and franchise taxes,” Murray said. “The excise tax is one that has been worrying state policy makers, so the turn-around was very, very warmly greeted.”

 Based on sales tax revenues, December was a “pretty good month,” Murray said.

 “We would like to see the sales tax do a bit better, but growth in the range of about 6 percent is really very good for where we are in the business cycle here in the state of Tennessee,” Murray said.

 December revenue collections actually were sufficient to create a small surplus for the month.

 “That’s very encouraging, but I don’t think it takes the monkey entirely off the back of the state,” Murray said. “If that continues over the coming months, we should be able to nibble away at the revenue shortfall the state faces.”

 Because December tax collections are based on November business activity, tax returns for the overall Christmas season will not be known for another month.

 “What we will have to do is roll November and December together, comparing them with the previous year, to get a good sense of what the Christmas buying season looked like in Tennessee,” Murray said.

 Prior to the December collections report, estimates of a shortfall ranged as high as $100 million this year and $300 million next year. State government is prohibited from spending more dollars than it collects.

 State Finance Commissioner John Ferguson said Friday the increased revenue collections could help lower shortfall projections from $100 million to $76 million.

 The state collected $472.8 million during December, nearly $5.9 million more than expected. That was the second straight month tax collections exceeded projections.

 Contact: Dr. Matt Murray (423-974-5441)