State revenue projections still positive, Goetz says

Sales taxes also came in higher in February, Goetz said.

“The sales is 65 percent of what we collect,” said Goetz, adding that Tennessee has been about $30 million above estimates in past years. “That’s a good sign going into trying to put the budget to bed.”

One budget problem facing state officials is TennCare, the state’s expanded Medicaid program for about 1.3 million poor, disabled, elderly or otherwise uninsurable.

The state is planning to cut 323,000 enrollees in order to reform TennCare and keep it from consuming an additional $650 million in state spending next year — which would require deep cuts in almost every other budget area.

However, state officials are waiting to see if a federal court judge in Nashville will allow the disenrollment, and the 6th U.S. Circuit Court of Appeals in Ohio is reviewing whether that judge can even prevent the cuts. Both rulings are expected this week.

“Obviously with TennCare and a lot of other things, there’s need for that money,” Goetz said.

A negative in the March revenue report was the shortfall in business tax collections, which came in $24.7 million under budget. Franchise and excise taxes were expected to be $128.9 million.

Even though the business taxes are 14 percent of the state’s total tax collection, the finance commissioner said he’s not worried because April is the big month for them, “and we will know within a couple of weeks what franchise and excise will do for the entire year.”

Gov. Phil Bredesen has said he wants to use any extra money that could result from tax collections on state employee pay raises.

Right now, employees get a 1 percent raise and 1 percent bonus. But Goetz said the governor wants to replace the one-time bonus money with recurring money, which “would free up one-time money to be used for other things,” a plan he says looks promising.

“Right now, based on this month’s returns in sales, you’d have to say it’s very positive,” he said.