KNOXVILLE, Tenn.– Further cuts in state budgets this fiscal year can be avoided if tax collections continue to exceed estimates, a University of Tennessee economist said Friday.
Dr. Matt Murray of the UT-Knoxville Center for Business and Economic Research said the state’s May revenue collections report shows revenues were about $15 million ahead of estimates for the year-to-date.
“Fifteen million is not a huge some of money, but it’s not pocket change,” Murray said. “Every surplus dollar we can get will help forestall any further cuts in this fiscal year.”
To balance the state’s budget, revenue collections must continue to grow by 2.2 percent. The actual year-to-date growth rate has been 5.4 percent, Murray said.
Murray said he is encouraged by the 5.8 percent growth in sales tax collections.
“We could always benefit from stronger growth, but in light of current economic conditions I don’t think we can expect the sales tax to show any stronger growth.” The growth in May sales tax receipts indicates that actual sales during April exceeded the national pace of 3.5 percent, Murray said.
Other revenue categories posting gains during May included income, franchise, gross receipts and gasoline taxes. Tobacco, privilege and excise tax collections were down.
Contact: Dr. Matt Murray (423-974-5441)