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Business and Economy NewsTracker

Personal Income Rises 3.8 Percent in TN

Personal income in Tennessee rose 3.8 percent last year compared to 2009, putting the Volunteer State ahead of the nation, which saw incomes rise on average 3.0 percent.

Personal income, which includes earnings as well as other sources like dividends and interest, grew in Tennessee from $215.8 billion in 2009 to $224 billion last year, according to new statistics release by the Bureau of Economic Analysis.

The figures point to a continuing economic recovery, though the positive news was not shared by all industries. The construction and real estate industries continued to decline nationally, the Bureau reported, while health care grew through the recession and outpaced manufacturing to become the largest private industry in 2009. Health care represented 11.2 percent of earnings last year.

In Tennessee, health care and social services constituted $23.2 billion in earnings last year, compared to $21.6 billion from manufacturing and $24.9 billion in government.

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News

December Revenues $16.1M Less Than State Expected

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,”

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Press Releases

Tennessee Named ‘State of the Year’ by Business Magazine

State of Tennessee press release, 6 Jan. 2010:

Hemlock Semiconductor Earns Silver Award for 2009 Economic Development Deal of the Year

NASHVILLE – The editors of Business Facilities magazine, a national economic development publication, have named Tennessee the magazine’s 2009 State of the Year for the number of new jobs created and amount of capital investments made during the calendar year. New Jersey-based Business Facilities also named the Hemlock Semiconductor project in Clarksville, Tennessee its 2009 Silver Award winner for Economic Development Deal of the Year, citing the company’s announced investment of $1.2 billion dollars and the creation of 500-900 new jobs.

“With our strong and productive workforce, low taxes and nationally recognized business climate, Tennessee continues to distinguish itself as one of the most business-friendly states in the nation,” said Governor Phil Bredesen. “I appreciate this recognition of our success in securing corporate investment and creating higher skilled, better paying jobs for the people of our state.”

“Despite the economic downturn, Tennessee welcomed more than 16,700 new jobs and $3.1 billion in new capital investments in 2009,” said Commissioner Matt Kisber, Tennessee Department of Economic and Community Development. “Job creation continues to be our top priority, and we are grateful to Business Facilities for recognizing the efforts to generate economic growth in our state.”

Business Facilities editors noted Tennessee won the honor “due to an aggressive and creative development effort that defied the economic downturn with a series of multi-billion-dollar projects.” Cementing Tennessee’s position on top were back-to-back announcements that the world’s two largest polysilicon manufacturers, Hemlock Semiconductor and Wacker Chemie AG, would both locate major production facilities in the state.

“In a difficult economic year, Tennessee has set a proactive example of successful development that should serve as a model for all states charting their path to recovery. Governor Bredesen and his team have consistently impressed us with a strategy that has put in place a solid foundation for future growth for years to come, moving Tennessee into a leadership position in emerging and established industries,” said Jack Rogers, Editor in Chief of Business Facilities magazine. “Business Facilities congratulates Tennessee for a well-deserved honor as our 2009 State of the Year.”

The magazine also recognized Tennessee’s commitment to the creation of clean energy jobs with its innovative Green Energy Tax Credit for certified green energy supply chain manufacturers. The Green Energy Tax Credit was also expanded last year to include integrated customers and suppliers and qualified affiliates of green energy manufacturers.

The Business Facilities awards are added to a collection of honors Tennessee has received for its economic development efforts in 2009. Tennessee was ranked among the top five states in the U.S. for best business climates by Site Selection magazine. Southern Business & Development magazine named Tennessee a co-state of the year and Governor Phil Bredesen, Commissioner Kisber and Revenue Commissioner Reagan Farr were named to the publication’s Ten People Who Made a difference list.

Tennessee also won Area Development magazine’s prestigious Gold Shovel Award, which is presented annually to the state achieving the most success in terms of job creation and economic impact.

About the Tennessee Department of Economic and Community Development.

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Press Releases

TN Unemployment Down in 50 Counties, Up in 36, Same in 9

State of Tennessee Press Release, 23 Dec. 2009:

NASHVILLE – Tennessee’s unemployment rate for November was 10.3 percent, down 0.2 percentage point from the October rate of 10.5 percent. The United States’ unemployment rate for the month of November was 10.0 percent.

County non-seasonally adjusted unemployment rates for November 2009, released today,

show that the rate decreased in 50 counties, increased in 36, and remained the same innine counties.

Lincoln County registered the state’s lowest county unemployment rate at 6.7 percent, down 0.2 from its October rate. Lauderdale County had the state’s highest unemployment rate at 18.6 percent, down 0.2 from the October rate, followed by Haywood County at 18.0 percent, up from 17.9 percent in October.

Knox County had the state’s lowest major metropolitan rate of 7.7 percent, down 0.1 percentage point from the October rate. Hamilton County was at 8.5 percent, down 0.2 percentage point from the October rate. Davidson County was 8.8 percent, down 0.1 from the previous month, and Shelby County was 10.0 percent, down 0.1 from the October rate.

Click Here For More Information (pdf)

Categories
News Tax and Budget

Slow Economy Predicted to Slowly Improve in 2010

Tennessee’s economy is showing signs of recovery, but the government’s tax take isn’t going to start rising again for a while, a University of Tennessee economist is forecasting.

William F. Fox, director of UT’s Center for Business and Economic Research in Knoxvillle, says November’s tax collection numbers for the state, although still down from last year, are an improvement over previous months in 2009 — at least in terms of showing a smaller falloff from 2008.

“I expect that to continue,” Fox told TNReport.com. He also spoke earlier this week before the State Funding Board and will talk again about the Volunteer State’s economic picture with members of the Legislture’s Joint Business Tax Committee on Thursday.

Still, negative revenue growth is probably in store for the state for the next six to eight months, he predicted.

November tax collections for Tennessee lagged $13.5 million below budgeted estimates, the Department of Finance reported Monday. Sales tax collections were down $21.2 million.

“The recovery in tax revenues is slow everywhere,” said Fox. “And the fact that you are experiencing economic growth does not necessarily equate to better tax collections.”

But Fox said he expects three percent revenue growth next year. “Tax revenues will begin to recover slowly after the economy begins to grow,” he said.

The state’s dreary employment market will also take some time to brighten, even though Fox said there’s evidence Tennessee businesses are on the whole expanding production. Unemployed workers are probably not going to see a glut of “Help Wanted” signs cluttering up store and company windows, at least in the short term.

Estimates released last month showed Tennessee’s unemployment at 10.5 percent — and much higher in many rural communities. State Labor Commissioner James Neely said the numbers, which overall were unchanged from October, indicated “a pattern of stabilization in most sectors of Tennessee’s economy.” New numbers are due out soon.

Fox doesn’t anticipate employment will begin growing in earnest for the next three or four months. “That’s part of why tax revenues won’t begin to improve for a while either,” he added.

Categories
Press Releases

State: Tax Collections Down Again

State of Tennessee Press Release, Dec. 14, 2009:

NASHVILLE – State tax collections fell below budgeted estimates in November, for the fourth consecutive month of the fiscal year that began on July 1, 2009. Finance & Administration Commissioner Dave Goetz today announced that state revenue collections for November were $708.2 million, which is 0.52% below November 2008 collections. November collections reflect consumer spending in October.

“November is the 18th consecutive month in which sales tax collections have experienced negative growth,” Goetz said. “If there’s a bright spot, it’s worth noting that the growth rate for sales tax collections in November, while still negative, fared slightly better than the month before, when it was negative 7.8 percent.”

“It’s important to remember we won’t see how after-Thanksgiving retail sales performed until this time next month, when we’ve collected revenues for November spending.”

On an accrual basis, November is the fourth month in the 2009-2010 fiscal year.

November collections were $13.5 million less than the budgeted estimate. The general fund was under collected by $8.1 million and the four other funds were under collected by $5.4 million.

Sales tax collections were $21.2 million less than the estimate for November. The November growth rate was negative 4.45%. Year-to-date the growth rate is negative 7.52%.

Franchise and excise combined collections for November were $42.3 million, which is $11.6 million above the budgeted estimate of $30.7 million.

Gasoline and motor fuel collections were $5.3 million less than the budgeted estimate of $72.5 million.

Tobacco tax collections for the month were over collected by $4.3, with November collections at $27.8 million.

Inheritance and Estate taxes were under collected by $3.7 million for the month.

All other taxes were over collected by a net of $600,000.

Year-to date collections for four months were $114.8 million less than the budgeted estimate. The general fund was under collected by $96.3 million and the four other funds were under collected by $18.5 million.

The budgeted revenue estimates for 2009-2010 are based on the State Funding Board’s consensus recommendation adopted by the first session of the 106th General Assembly in May of 2009, and are available on the state’s Web site.

Categories
News

Rural Tennessee Unemployment Continues to Soar

While it’s no secret economic times are tough this year all across the Volunteer State, job seekers living in West Tennessee are having an especially difficult time finding and keeping work, according to the latest government unemployment statistics.

As of the end of October, unemployment rates in counties from the Mississippi River to just west of Nashville hovered in the high teens, in some cases pushing 19 percent, according to recent numbers from the state Department of Labor and Workforce Development.

With the exception of Shelby, Montgomery and Dickson Counties, the unemployment rate in every county west of Nashville meets or surpasses the statewide rate of 10.5 percent. Tennessee-wide unemployment was 6.9 percent for the same period last year.

“I think that a lot of the hit that we take has been the erosion of the manufacturing base,” said state Sen. Lowe Finney, a Jackson Democrat.

Several plants have closed or announced layoffs in the past year, including Cub Cadet in Brownsville, a lawn mower plant where 480 full time and seasonal workers lost their jobs when the facility closed in July. Haywood County’s unemployment rate now checks in at 17.9 percent.

Tennessee’s unemployment rate is just above the nation’s 10.2 percent rate for October. Since then, the national numbers dropped to 10 percent in November, though state numbers are not yet available.

Lauderdale County’s unemployment rate was 18.9 percent, the highest in the state and a 4.2 percent increase from October 2008.

Henderson County ranks at 17.6 percent and Carroll County at 17.3 percent.

While each western county struggles with unemployment, those home to larger population centers are faring better, although still significantly worse than the state rates from last year. The rate in Shelby County is 10.2 percent and Madison County is 10.5 percent.

That isn’t to say times are flush for job-hunters in regions east of Nashville. Hancock County unemployment hit 18 percent and Scott County landed at 17.8 percent, and most other counties have unemployment rates in low teens or below.

While Finney said he’s encouraged by the recent drop in the national unemployment rate, he says Tennesseans ought not to expect the picture to brighten anytime soon; the state’s employment numbers tend to lag six months behind.

“If other parts of the country experience good news, hopefully that means a few months from now, Tennessee will experience the same thing,” he said.

Senate Republican Leader Mark Norris, R-Collierville, predicts it’ll take even longer than that before unemployment turns around.

A former chairman for the Council of State Governments’ Economic Development Committee for the Southern Legislative Conference, Norris says the stimulus hasn’t yet kicked in the way state officials expected, which he says means it’ll take still more time to see positive changes.

“I would say it’s probably not likely we’ll be able to see any appreciable improvement until the third quarter of 2010 at the earliest,” he said.