Lackluster tax collections could force the state to lower its revenue estimates even further as lawmakers on Capitol Hill debate how to best balance the books, the state budget director said Tuesday.
That’s going to mean lawmakers may have many millions of dollars less than the $10.1 billion they expected to work with this year as they enter the final months of the legislative session. They plan to spend that time finalizing a state spending plan based on expected revenues from gasoline, sales and other taxes.
“I think there’s a good prospect that we may have to lower our revenue estimates some more, but I really cannot tell you how much,” Bill Bradley, state budget director, told members of the Senate Finance, Ways and Means committee Tuesday.
The amount of revenue collected in February for January sales is still being finalized, and those numbers will likely be released next week.
“I certainly would think that the collections, when we close for February, are likely to be worse than we had hoped for,” Bradley said.
February would mark the twenty-first consecutive month revenues have been down in Tennessee.
Revenue from December sales — which were collected in January — were $16 million less than the state projected. The month before, revenues were down $54 million.
The most recent revenue collections indicate that Tennessee has collected $185 million less than it expected since its fiscal year began in July.
If the state lowers revenue estimates for the rest of the current budget year, the state will also have to lower the base budget for the next year, said Lola Potter, spokeswoman for the Department of Finance and Administration.
Otherwise, she said, “we would be digging an even bigger hole for the state.”
The state will want to start the new budget year assuming the same revenue trend as prior months, she said. If the state has less revenue through June than it expected, she said the state can expect collections to follow that trend.
“To keep the state’s budget in balance we have to lower the budget in line with those revenue projections,” she said.
Estimates on how much the state would collect in tax revenue were first lowered in December to $10.12 billion from $10.29 billion.
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