State financial officers see strong growth in revenue

NASHVILLE, Tenn. Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. — Members of Tennessee’s funding board were told Wednesday that the state’s revenue growth is relatively strong, mainly because of continued spending by consumers despite natural disasters and high gas prices.

The board, which is preparing figures that will be key to next year’s state budget, heard revenue growth forecasts from several economists that ranged from 3.6 percent to 5.3 percent over the next two years. The average growth rate is expected to be about 4.3 percent.

“It is good news,” said Finance Commissioner Dave Goetz. “Everybody seemed to be in fairly close proximity to each other.”

Also Wednesday, the U.S. Commerce Department said the national economy grew at a 4.3 percent pace in the third quarter, the best showing in more than a year.

Officials said the performance offered testimony that the country’s overall economic health managed to improve despite destructive Gulf Coast hurricanes, as well as the recent gas prices.

William Fox, director of the University of Tennessee’s Center for Business and Economic Research, said state consumers are reflecting the national trend.

“Consumers keep finding new ways to spend,” Fox said.

Board members were also told that money lost as a result of e-commerce or remote sales — such as catalog and Internet transactions — weren’t as bad as expected because “more vendors are remitting taxes,” Fox said.

“The hit is not as bad as we thought it would be because a lot of companies are in compliance,” he said.

Later in the meeting, the board also received figures from Tennessee State Lottery officials and the Tennessee Higher Education Commission, which awards scholarships from lottery money.

According to the state Fiscal Review Committee, which also presented figures comparable to those from lottery officials, net revenue from the lottery is projected to be about $856 million in fiscal year 2007. Of that amount, about $240 million will go toward education initiatives.

THEC officials estimate they need roughly $206 million for lottery scholarships and the Department of Education is seeking $25 million to continue initiatives set for the governor’s expanded preschool program.

“We think that’s very close to what the program will require,” Dr. Robert Ruble, executive director of the Tennessee Student Assistance Corporation, said of the lottery estimate. “That’s a good match.”

Goetz said the board plans to know which economists’ forecast to use by the time it meets again next week.

“We have a number of substantial obligations to address in the next budget,” he said. “It’s encouraging that we are seeing the kind of growth we would hope for.”