NASHVILLE, Tenn. (WTVF) — Tennessee started their budget season this week and experts are predicting stagnant state revenue which could impact your wallet soon.
Financial experts told Tennessee's panel in charge of predicting revenue growth that they see virtually no revenue growth, or much smaller percentages than usual over the next two years.
No revenue growth could mean no sales tax holiday on groceries next year.
The state funding board’s revenue projects are critical as programs pushed by federal coronavirus relief funds are set to expire which leaves the state with the choice of whether to end or fund them from its own revenue.
The projections will also impact whether the state can cut taxes or afford to add any new programs.
The panel heard presentations from economic experts at East Tennessee State University, the state Department of Revenue, the Federal Reserve, the Tennessee General Assembly’s Fiscal Review Committee and the University of Tennessee.
They all detailed Tennessee’s economic outlook by giving out projections for future tax revenue.
Those experts say the state and national economy will grow at a much slower pace over the next couple of years.
They pointed out that part of the reason Tennessee’s revenue isn’t growing as fast is because of a significant business tax cut already leading to a slowdown in franchise and excise tax collections. From July 1 to Sept. 30th of this year these taxes missed projections by around $61.4 million.
Over the past five years Tennessee’s revenue has grown from $17 billion to $24 billion. This has allowed the state to spend more money on projects and keep up with the growing wages for employees, but the big question is what those wages and expenses will look like if the predictions ring true.
During this period, state officials used the surplus to increase its funding for schools by $1 billion, give $884 million in incentives to Ford and contribute $850 million towards professional sports stadiums in Nashville and Memphis.
Tennessee’s budget hearings started yesterday, and the governor will submit his proposed budget to state lawmakers before his State of the State address next year.
