October F&E Revenue Dips

Significant corporate tax refund requests led to a decrease in franchise and excise tax revenues in October, putting total collections at $703.5 million, or 6.42% less than October 2006 collections. “Unusually large refund requests by corporate taxpayers for overpayments in the 2007 fiscal year made franchise and excise collections weaker than expected,” said Tennessee Department of Revenue commissioner Reagan Farr. “The significant outflow of refunds may be an early sign of a softening economy and less robust revenue collections.”In October, the third month in fiscal 2008, general fund revenues were $102.4 million less than the budgeted estimate. Franchise and excise taxes combined were $17 million below the budgeted estimate, while sales tax collections were $16.5 million less than the forecast. Gasoline and motor fuel collections increased by 2.45 % and were $3.5 million above the budgeted estimate of $72.7 million. Year-to date collections for three months have been $135.9 million less than the estimate. “Continuing to be conservative is critical as we begin to navigate what appears to be a softening economy,” said Finance and Administration commissioner Dave Goetz. The budgeted revenue estimates are based on the State Funding Board’s consensus recommendation adopted by the General Assembly in June.