Tennessee’s budget shortfall reaches $276M

The state Finance Department announced Tuesday that the budget shortfall rose to $276 million in March. The State Funding Board in December estimated that revenue collections could fall between $147 million and $240 million below exceptions for the spending year that ends on June 30.

Gov. Phil Bredesen, a Democrat, relied on those projections to lay out his budget plans in January. Bredesen and Finance Commissioner Dave Goetz have since warned lawmakers that deeper cuts are likely.

‘We anticipate having to make some difficult decisions to keep state spending within the limits for the remainder of the current year and into next year,’ Goetz said in a release.

The Funding Board last week moved the date for making its final projections from Thursday to May 1, so officials will have a better picture of volatile business taxes following the April 15 tax filing deadline.

Lawmakers rely on the Funding Board estimates to finish the state’s budget for the 2008-2009 spending year.

The amount of this year’s shortfall will spill over into plans for next year because the state will be starting from a lower base. The General Assembly’s only constitutional responsibility is to pass a balanced budget before adjourning.

General fund collections missed projections by $64 million in March, mostly on the worse-than-expected performance of business taxes.

Corporate franchise and excise taxes came it at $45 million below the budgeted estimate, while sales tax revenue fell about $13 million short of expectations.

The state has collected $5.73 billion for the general fund over the first eight months of the budget year.