State Revenue Estimates Down

Several Tennessee economists are predicting a budget shortfall for this fiscal year, which could be as much as 330-million dollars.

The State Funding Board, which forecasts the size of the state’s budget, met yesterday to hear revenue estimates. All of them predicted positive, but slower growth than they had originally anticipated. Sales, tobacco and corporate taxes are all expected to be lower.

Of the economists on the board, the lowest budget estimate was a shortfall of 150-million. Middle Tennessee State University economist Albert DePrince predicted the largest shortfall at 330-million. DePrince says the crisis in the mortgage and housing industry is dragging down the state’s economy.

“It will affect the state’s revenue from the effect on the national economy. The spillover effect of the national economy on our economy. So if there’s a liquidity crisis, then there’s difficulty for individuals, corporations to receive money, borrow, then it’s going to affect spending, both nationally and locally.”

The 42-cent increase in the tobacco tax is generating less revenue than the 239-million dollars originally forecast. Economists attribute that – in part – to the new ban on smoking in restaurants.

State Finance Commissioner Dave Goetz says the state budget will probably be short in the neighborhood of 200-million dollars, but the Funding Board won’t make its official projection until tomorrow.

Goetz says the state will manage and shouldn’t have to dip into the rainy day fund.