State’s January Revenues Down $3.3 Million or $17.6 Million? (240)

KNOXVILLE, Tenn. — State revenue collections in January were $17.6 million below original estimates with a year-to-date shortfall of $43.3 million, a University of Tennessee economist said Wednesday.

Matt Murray of the UT Center for Business and Economic Research said his figures don’t square with the state’s January revenue report because the state lowered its revenue estimates from the original projections used to figure the state’s 1996-97 budget.

The change explains why Finance Commissioner John Ferguson said Tuesday that January revenues were down $3.3 million, Murray said.

“What the state has done changed the underlying estimates for the fiscal year as a whole,” Murray said, adding that mid-year revisions of budget estimates are not new.

“If you know you have a shortfall, it makes sense to revise your estimates,” Murray said. “That’s how you rein in spending. A couple of years ago we had a similar revision and some people were upset — called it a shell game — but that’s not it.”

Murray said January revenue collections, which included taxes on December’s holiday sales, were lower than he anticipated.

“There were many, myself included, who had a bit more optimism about what might happen in the remainder of the year, but there — in January alone — we were hit with a very substantial shortfall.”

Murray said the state’s revenue problems — a shortfall in the range of $60 million to $70 million — remain small in relation to the state’s $14.5 billion budget.

Contact: Dr. Matt Murray (423-974-5441)