March 5, 2004

Tennessee Revenue Surplus Grows Ever Larger

Tennessee state government's tax revenue surplus grew again in February, rising another $14 million to $111 million after seven months of revenue collections for the current fiscal year.

According to the state Department of Finance and Administration, the state's sales tax continued to fuel the surging surplus, bringing in $16.2 million more than the amount projected in the budget for February. For the first seven months of the current fiscal year, revenue from the sales tax is $68.6 million in surplus - a powerful rejection of the claims many pro-income tax politicians made during the failed push for an income tax in the late 1990s and early 2000s that the sales tax was an obsolete and under-capable revenue producer.

Indeed, sales tax revenue was 7.50 percent higher in February than in February 2003, and is 6.60 percent higher for the first seven months of the current fiscal year than it was in the same seven months of the previous fiscal year.

Overall tax revenue was 4.28 percent higher in February than in February 2003, and is 6.67 percent higher for the first seven months of the current fiscal year than it was in the same seven months of the previous fiscal year - amounting to $308 million higher revenue collections.

Incidentally, 6.67 percent growth in tax revenue is more than enough to cover paying for the cost of government rising to offset inflation and population growth. The rising surplus is a powerful argument for the Taxpayers Bill of Rights pending in the Tennessee legislature. Especially as the Bredesen administration is planning on spending the windfall rather than saving it for a rainy day or rebating it to the over-taxed taxpayers who paid it.