April 13, 2007

Still Growin'

Tennessee's tax revenue surplus surged another $69.2 million in March - twice what it would take to cutting the sales tax rate on food by half a cent next year. The surplus now stands at $185 million with four months left to go in revenue collections for the 2006-07 fiscal year. Here's the press release and data from the Tennessee Department of Finance & Administration.

The press release from F&A spins the big monthly surplus as possible the result of some large corporations paying their quarterly franchise taxes - due in April - early, but I doubt it. The Department of Revenue - and, therefore, F&A - would already know if that was the case. F&A is just trying to play down the surging size of the surplus for political reasons. But in the end - the end of the fiscal year - it won't matter. Tennessee will, in all probability, have raked in another $300 million to $450 million in surplus tax revenue - that's extra tax money the state doesn't need to pay for this year's budget.

Eight months into the fiscal year, this year's revenue surplus already 70 percent larger than last year's $108.8 million surplus after the first eight months of fiscal year 2005-06 - and the state ended fiscal year 2005-06 with a surplus of $411.2 million.

Reducing the state's sales tax on food even one cent would cost the state just $78 million, an amount not much larger than the surplus revenue the state collected just in March.