State sales taxes grow by highest rate since 2007

Tennessee’s latest revenue figures released Wednesday show monthly sales tax collections grew at their highest rate since April 2007 and that the state’s general fund exceeded projections by $46 million through the first quarter of the budget year.
Finance Commissioner Dave Goetz, who has left the administration of term-limited Democratic Gov. Phil Bredesen at the end of this week, said the improved economic performance could mean the cancellation of a call for agencies to cut spending by up to 3 percent.
“That doesn’t mean the new administration might not want to take some of those reductions and deal with that,’’ Goetz said. “But the good news is that we might be able to leave them with the prospect of reasonable revenue growth.’’
Republican Gov.-elect Bill Haslam takes office on Jan. 15. His spokesman David Smith, called the quarter’s growth “encouraging,’’ but noted that they compare with a year-ago period that was poor.
General fund collections in the same quarter of last year were $88 million below expectations and they were $200 million short in the first quarter of 2008. Smith said Haslam is paying close attention to the state’s revenue picture and is preparing to address “the host of budget challenges he will face when he takes office in January.’’
Sales taxes, which account for two out of every three tax dollars collected in Tennessee, came in at $733 million in October, a 6.4 percent jump from the same month last year. The growth rate through the first three months of the budget year was 3.9 percent.
October collections figures reflect economic activity in the previous month. Goetz cautioned that it’s unclear whether the performance so far this year can be sustained.