The Tennessee State Capitol in downtown Nashville.NASHVILLE - Tennessee tax collections inched up in February, with overall revenues up $5 million over projections.
Still, Finance Commissioner Mark Emkes worries that rising fuel prices and Congress' failure to enact a budget "will soon begin to erode the positive growth trend we are now enjoying."
Revenues in February, which reflect January activity, came in at $744.3 million. The $5 million increase came despite the end of a federal payroll tax holiday and the resumption of higher deductions on Social Security.
Analysts expect the higher payroll tax to affect consumer spending, which drives Tennessee's main source of tax revenue -- the sales tax.
In a news release, Emkes said February collections marked the seventh consecutive month of positive growth in the current fiscal year. He said several smaller tax categories grew along with sales tax collections.
He said officials see "a very slow but improving economy in Tennessee," but also are concerned about gas prices and the federal budget.
The general fund, which funds most functions of state government such as education, exceeded estimates by $12 million while the four other funds fell $7 million below projections.
Sales tax collections grew by 2.42 percent and were $3 million above the February estimate. For the first seven months of the fiscal year, the growth rate is 2 percent.
Business franchise and excise taxes were $200,000 above the budgeted $37.7 million for the month and have exceeded estimates for the first seven months by $133.8 million. The growth rate so far in the business taxes is 8.88 percent.
But soaring prices at gas pumps are impacting sales and state fuel taxes. February collections fell 3.26 percent, or $6.1 million below the estimate of $70.7 million. So far this fiscal year, fuel revenues are $15.4 million below projections.
Inheritance and estate taxes, which are being phased out, exceeded estimates by $3.5 million for the month. Year- to-date collections are $10.6 million more than projections.
Another business levy, the privilege tax, was $2 million more than the February estimate and up $15.6 million for the year to date.