Economists from around Tennessee presented an array of projections Wednesday to the State Funding Board, estimating how tax revenues will change over the next couple of years.
Professor William Fox from The University of Tennessee Knoxville tells officials he expects revenues to go up this year by about a half percent, but warns not to be overly optimistic.
“One needs to be cautious,” he says, “This is not suggesting that revenues are growing. It’s just that they’re almost keeping up with inflation.”
On the rosier end of the spectrum, economists from East Tennessee State University forecast more than 5% growth in tax revenue. However that prediction hinges on a successful distribution of the COVID-19 vaccine and another federal aid package of at least $1 trillion.
Tennessee’s Department of Revenue and Fiscal Review Committee each projected more modest growth: 1-2% this fiscal year and ranging between 3.5% to 5% the year after that.
Presenters emphasized the positive impact that federal relief money had on the economy in the spring and summer by putting more money in consumers’ hands. The sales tax from that consumption and a housing boom has greatly bolstered the state’s revenues and prevented them from plummeting.
None of the experts predicted significant losses in fiscal year 2020-2021, despite the economic downturn. The funding board will meet later this month to adopt a range for the governor and state legislature to use for the budget next year.
This story was reported by WPLN.