Sales taxes grow for first time in 2 years

Tennessee lawmakers working to hammer out the state’s spending plan for the upcoming budget year finally have some good news: The state’s monthly sales tax collections have grown for the first time in nearly two years.
General fund collections came in at $51 million above expectations in April, which reflect economic activity in the previous month.
Sales taxes, which account for two out of every three tax dollars collected by the state, grew by 5.6 percent in the month. By contrast, sales tax collections through the first nine months of the budget year shrunk by 4.1 percent.
The last time Tennessee tax coffers saw a growth in sales taxes was in May 2008.
Corporate franchise and excise taxes came in almost $48 million above expectations in the month.
Despite the improved April figures, the state’s general fund was still about $154 million below original projections for the budget year that ends June 30.
Legislative leadership discussed the upcoming budget with Democratic Gov. Phil Bredesen at their weekly breakfast in Nashville on Wednesday morning.
Senate Republicans have offered their alternative to revenue measures proposed by Bredesen that included a $2 increase in driver’s license fees, lifting a sales tax cap on big-ticket items and eliminating a tax exemption for the first $15 on cable bills.
The GOP plan would instead begin to phase out a 401(k) match program for state employees and eliminate a planned 3 percent bonus. It would also dismantle the Career Ladder program for teachers established by former Republican Gov. Lamar Alexander.
House Democratic Caucus Chairman Mike Turner of Nashville told reporters after the breakfast that House Democrats have concerns about the GOP plan—particularly eliminating the bonus—and would prefer to stick to a budget proposal they put together last year.
“We put... a three-year plan in place last year and we’re trying to stay the course,’’ Turner said.