Tennessee sales tax revenue hits historic low

by Barbara Mathieson | August 12, 2009 at 04:05 am

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This is frightening news to me, as my husband and I are still unemployed. We only purchase food for ourselves and gasoline for our cars. All personal purchases have been delayed. We bought a replacement garbage disposal, but that was an emergency as our sink was leaking with the old one. Our financial situation gets worse and worse each day.

By Lucas L. Johnson II • ASSOCIATED PRESS • August 12, 2009

A continued decline in sales tax revenue in July means Tennessee has experienced a historic full year of negative growth, state Finance Commissioner Dave Goetz said Tuesday.

Goetz said overall July revenues were $61.8 million less than the state budgeted, the fourth consecutive month of double-digit sales tax losses.

"This is going to be hard to recover from, because we don't see any real sign of upturn," Goetz said.

Franchise and excise tax collections showed positive growth in July, he said. However, that was because of one-time payments, not an upswing in the economy.

Bill Fox, a state economist and director of the University of Tennessee Center for Economic Research, said it will likely be 2011 before Tennessee sees any growth in sales tax revenue.

It will be tough for sales taxes to improve anytime soon because they've been falling dramatically throughout the year, and there's little hope of a huge growth rate, he said.

"It's hard to see any of the taxes growing fast," he said.

Sales taxes account for about 60 percent of the state's revenue.