Experts project healthy budget surplus, solid growth for state

Experts project healthy budget surplus, solid growth for state

November 14th, 2015 by Andy Sher in Local Regional News

Dr. Bill Fox of the University of Tennessee, left, speaks with Chattanooga Chamber of Commerce and city officials about the details of a study dealing with the economic impact of the VW plant expansion in this photo from May. Chattanooga Mayor Andy Berke is at right.

Photo by Dan Henry /Times Free Press.

NASHVILLE — Economists are projecting that Tennessee government likely will see another large budget surplus in the current fiscal year and healthy revenue growth in the next.

Members of the Tennessee State Funding Board were presented the estimates Friday as the officials prepare to recommend tax-and-fee growth parameters to guide Gov. Bill Haslam and state lawmakers when dealing with the remainder of the current fiscal year and fashioning the upcoming 2016-2017 budget.

The most optimistic projections for Tennessee's current-year general fund, which pays for most government operations like education and TennCare, came from economist Robert Currey with the General Assembly's Fiscal Review Committee.

Currey estimates this year's surplus would be $422 million for the fiscal year that will end June 30, 2016. It's already more than halfway there, with administration officials announcing later in the day Friday that the general fund already is running $210 million over projections in just the first three months of this fiscal year.

Bill Fox with the University of Tennessee's Center for Business and Economic Research pegged the surplus at $370 million. And, relying on economists in the department he runs, state Revenue Commissioner Richard Roberts projected a $340 million surplus.

But when it comes to estimating revenues for the 2016-2017 budget that goes into effect this coming July 1, Roberts had the most optimistic outlook. He's projecting $525 million in new revenue based on a 4.81 percent growth rates in taxes, fees and other collections.

That compares with Currey's $428 million estimate, based on 3.89 percent growth.

Fox's estimate is $376 million, based on 3.44 percent growth.

The funding board is comprised of the state comptroller, treasurer, secretary of state and a representative of the governor, Finance Commissioner Larry Martin. The commissioner was absent from Friday's meeting.

Next week the panel is scheduled to announce its own projections.

Comptroller Justin Wilson later told reporters that, although estimates "do look positive," he is "not as optimistic as some of the presenters were."

"We got through a process and have to analyze and consider what they say. Our goal is to try to hit the number. It's just as bad to overestimate as it is to underestimate it."

Secretary of State Tre Hargett said he will have to go and "study a little more" as the four funding board members seek a consensus.

"I think somebody used the word 'cautiously' optimistic," he said. "We just try to be realistic.

"We'd rather be pleasantly surprised this time next year or during the legislative session than having the shock value of having overestimated revenues," he added.

Lawmakers already are announcing plans on how to spend one-time surpluses from the fiscal year that ended last June 30, as well as new revenues. The list includes repaying money taken by previous administrations from the transportation fund and reducing or eliminating the state's Hall Income Tax on stock dividends and bond interest.

Haslam, a Republican, noted that annual cost increases in education, TennCare and other programs easily gobble up $300 million or more. He has resisted eliminating cuts to the Hall Income Tax, but acceded to chipping away at it by lifting caps on income exempt from the 6 percent tax.

Contact Andy Sher at asher@timesfreepress.com, 615-255-0550 or follow on twitter at AndySher1.com.