Image: The Tennessee Legislature meets for the start of its 2024 legislative session on January 9, 2024 in Nashville, Tenn. Image Credit: John Partipilo
By Adam Friedman [Tennessee Lookout -CC BY-NC-ND 4.0] –
Following A Massive Rise In Tax Revenues Over The Past Four Years, Tennessee’s Budget Outlook Is Not As Rosy Going Forward, But On Tuesday The State’s Chief Financial Planner Told Lawmakers To Remain Calm.
“We are prepared to weather the speed bumps ahead,” said Jim Bryson, the Tennessee Department of Finance and Administration commissioner.
Bryson spoke before the Senate finance committee, whose chairman, Sen. Bo Watson, R-Hixson, has spent the last few months ringing alarm bells over the state’s budget projections.
From August to November 2023, tax revenue came about $88.4 million short of the state’s estimate. The biggest miss has been the franchise and excise taxes, which have come up $146.8 million short of predictions; the professional privilege tax missed by $33.1 million.
As part of a larger tax cut package, lawmakers changed several deductions in franchise and excise taxes, resulting in lower revenue.
But, sales tax revenue remains strong, coming in about $47.5 million over budgeted numbers, about 1.1% above estimates despite a three-month holiday on grocery sales.
The missed projections prompted the state’s funding board to estimate that revenue will come up about $718.8 million short during the 2023-24 fiscal year.
Bryson told lawmakers the state does have some breathing room, because state lawmakers dedicated nearly $2.6 billion from the 2023-24 budget to one-time expenses that won’t appear on the balance sheet next year.
But this extra money is likely to be partially spent by Gov. Bill Lee’s statewide school voucher plan, which would cost $140 million if passed, and a new franchise and excise tax collections method that is projected to cost $300-$400 million annually.
The Department of Revenue and the attorney general’s office are pushing the tax change as part of a “legislative fix” based on a U.S. Supreme Court ruling striking down a Maryland income tax law. Officials say how those taxes are collected could violate federal law banning the double-taxing of dollars.
