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« Tre Target | Main | A Surplus of Confusion » August 17, 2005Tennessee Ends Fiscal Year With Huge Revenue Surplus
Revenue collected in July, the 12th month of tax collections for the fiscal year, were $66.2 million more than the budgeted estimate, powered in part by $26.9 million in surplus sales tax collections in July. The state is described as having a $260.8 million surplus because the actual revenue collections for the fiscal year were $260.8 million ahead of the budgeted revenue estimate adopted as part of the state budget by the 103rd General Assembly in May of last year. The legislature gets its estimates from the State Funding Board In May of this year the General Assembly adopted new State Funding Board revenue estimates for the 2004-05 fiscal year that estimated a net general fund surplus of just $142.6 million. In other words, the State Funding Board has chalked up another year of inaccurate revenue forecasting, missing this year's actual revenue surplus by $118.2 million. The bottom line: Total revenue grew a hair under 6 percent, and Tennessee collected $260.8 million more in taxes than it needed to balance the 2004-05 budget that the legislature passed in May 2004 - or about $175 per family of four. Still, taxpayers shouldn't bother getting too excited by the big surplus. There are no plans for a tax rebate or reducing the sales tax or removing the sales tax from groceries. Instead, the Bredesen administration plans to spend the excess revenue. UPDATE: When the state's Revenue Commissioner, Loren Chumley, said just a month ago that the state would end the fiscal year with a surplus of "above $100 million," I predicted it would be around $225 million. We were both wrong. UPDATE: As requested by a commenter below, here are links to the press release, and also to the data in an Excel file. The data shows that the sales tax, Tennessee's single largest source of revenue, performed almost exactly as expected, while the franchise & excise taxes on business, the second largest source of revenue, provided $221.3 million of the excess revenue, indicating the state's economy was much healthier over the past year than the legislature's economic seers predicted it would be back in May 2004. Posted in Tennessee Budget & Tax Policy
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Yep, time to pass that income tax so as to save the state's credit rating and protect from certain financial ruin when the budget shortfall....oh, never mind. Posted by: Bob at August 17, 2005 04:46 PMIs there a link to the data? Posted by: SayUncle at August 17, 2005 07:17 PMExceeding a budget does not meant there's a surplus, just that they're over budget. A surplus would occur if revenues exceeded expenses. Posted by: SayUncle at August 17, 2005 09:05 PMSayUncle, I have always made it clear that when I refer to a revenue surplus I am referring to revenue above that necessary to balance the budget that was passed by the legislature. For too long various governors have over-spent the budget that the legislature passed, wiping out surplus revenue, and then claimed the state didn't have a surplus. Overspending should not be allowed to obscure the fact that Tennessee taxpayers paid $260 million more in taxes last year than was necessary to fully fund the budget the legislature passed. I'm not saying that it's not questionable but I would bet dollars to donuts that there is also, using your term, an expense surplus :) Posted by: SayUncle at August 18, 2005 07:36 AMPost a comment
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NASHVILLE - Tennessee state government finished the 2004-2005 fiscal year with a $260.8 million surplus, according to data released today by the Department of Finance & Administration.