The state collected more tax revenues in December than it did the last month of 2008 — possibly signaling that lackluster tax revenues could be inching closer to a turnaround, officials said Wednesday.
But revenues were still $16.1 million down for December, marking the twentieth month tax collections missed the mark for budget estimates.
“Better news, not good news. But maybe we’re at last starting to see some sort of turn,” said Finance and Administration Commissioner Dave Goetz.
Much of the growth came from franchise and excise tax revenues along with car sales, according to Goetz.
Tax collections represent a huge chunk of state revenues that pay for public services, programs and other state spending. Tennessee officials expected to see $10.2 billion in tax revenues this year, roughly a third of the money needed to fund the year’s state budget, according to state budget documents.
The consistently weak revenue collections have created a $1.5 billion hole in this year’s budget. Lawmakers will have until June 30, the end of the fiscal year, to fill that hole.
Although tax collections were down from expectations, revenues topped off at $947.4 million for December activity, surpassing last year’s revenues of $936.3 million. The tax revenues were collected in January.
Here’s a breakdown:
- Sales taxes were $20.4 million less than estimated.
- Franchise and excise taxes combined coasted $11.3 million above budgeted projections.
- Gasoline and motor fuel collections were $4.2 million below budget.
- Tobacco tax revenues were $451,000 above estimates.
- Inheritance and estate taxes raked in $1.8 million more that projected.
- All other taxes were under collected by a total of $5.1 million.
- Car sales grew from 2.8 percent in November, to 6.65 percent in December and 6.54 percent in January.
“The numbers are not good. It’s due to this economy and hopefully we’ll start pulling out of this recession,” said former House Speaker Rep. Jimmy Naifeh, D-Covington.
Sales taxes were down by 1.86 percent in December, which alone represents a $12 million falloff from revenue expectations, according to the Department of Finance and Administration.
“It is nice to see the gap has closed somewhat, but it’s kind of disappointing that this was the tax revenue from the Christmas season when you really had the hope maybe there’d be a big bump,” said Rep. Bill Dunn, R-Knoxville. “It’s moving in the right direction, but it’s still not good news,”