In light of dismal revenue collections, Tennessee got some welcome news Monday when the U.S. Department of Education awarded it $500 million from the Race to the Top stimulus program.
The Volunteer State, which requested $500 million in its application, was one of only two states receiving awards under the first round of the $4.35 billion program. (Delaware received $100 million.) Earlier this month, Tennessee was named one of 16 finalists in the first round.
Meanwhile, February revenue collections again fell short. The state received $638.9 million, which is $47.1 million less than the state budgeted.
“This entire fiscal year has brought us negative growth in the sales tax, which is almost two-thirds of our revenue,” said finance and administration commissioner Dave Goetz. “Moreover, the running total is now 21 consecutive months of negative growth in sales tax collections since January 2008, when the downward economic spiral began for us in Tennessee.”
Tennessee does not have a state income tax, but it does tax dividends and interest income. Goetz said a plan is in the works to end this fiscal year in June with a balanced budget, and ensure that the fiscal 2011 budget is also balanced.