(The Center Square) – After considerable growth in overall tax collections in recent years, Tennessee’s State Funding Board approved a minimal year-over-year increase of 1.13% or less in tax collection estimates for next fiscal year Wednesday.
Those estimates mark the basis for the budget state leaders will approve in its upcoming legislative session in the first half of 2024.
The funding board adjusted its estimates for the current budget year to be slightly below what was collected in the 2022-23 financial year and then 1.13% or lower growth for the 2024-25 financial year.
The total range approved was between negative 0.69% and 0.19% for this fiscal year and then between 1.13% to 0.13% of increase for next fiscal year.
“We are now at a point where this exceptional boom in consumer spending that the economy had been benefiting from over the past couple of years (is slowing),” Laurel Graefe, a regional executive of the Federal Reserve Bank of Atlanta Nashville Branch, said earlier in November to the board. “(Consumers are) no longer going to be able to rely upon this big pot of excess savings that we were seeing on consumer balance sheets in the past.”
Graefe said the economy across the country is slowing but Tennessee remains “uniquely and positively positioned” due to in-migration and being one of the top two or three states in the country in terms of the investment in electric vehicles which helps Tennessee’s economy “insulating from full force of slowing of economic condition.”
Tennessee Comptroller Jason Mumpower noted Wednesday the revenue estimates were conservative with lower growth rates than in recent years but they also are 40% more than pre-pandemic estimates.
