Humphrey: Tax collections still down

NASHVILLE - Gov. Phil Bredesen estimates Tennessee's tax collections will not return to 2008 levels until 2013, and for now they continue to shrink.

Finance Commissioner Dave Goetz said Friday that September state tax collections were $920.9 million, which is 5.7 percent below a year ago and $41.4 million less than expected when the current state budget was adopted in June.

Bredesen's comments came in a letter to U.S. Sen. Bob Corker and U.S. Rep. Bart Gordon, voicing concerns that national health care reform will mandate increased state spending.

"Bob and Bart, the problem that we're facing is simple: By 2013, we expect to have returned to 2008 levels of revenue and will have already cut programs dramatically - over a billion dollars," Bredesen wrote.

"At that point, we will have to start digging out - we will have not given state employees or teachers a raise for five years, our pension plans will need shoring up, our cash reserves ('rainy day fund') will have been considerably depleted and in need of restoration, and we will not have made any substantial new investments for years," the letter says.

Also at that point, he said, the next governor - Bredesen's term ends in January 2011 - will have dealt with "major cuts" to state programs.

"It's going to take at least a full decade to dig our way out and back to where we were prior to the recession," he said.

Goetz said he was "very disappointed" in the decline of revenue collections during September, which are based on taxable activity occurring in August.

The revenue shortfall makes it more likely that Bredesen will have to make additional cuts in budgeted expenditures - as authorized by the Legislature in the appropriations act.

"Going forward, we must continue to closely monitor state expenditures, in order to keep the budget in balance," Goetz said in a statement.

The report on the current revenue shortfall by Goetz is based on calculations by the Department of Finance and Administration. The Legislature's Fiscal Review Committee began doing its own calculations last month and did so again for the September figures.

Tom Humphrey may be reached at 615-242-7782.