State Comptroller Expects “Ugly” Budget To Come

The state legislature will take most of next week off and come back May 12 to hear the governor’s revised, and much smaller, budget for next year.

State Comptroller John Morgan told Democratic House members todayto expect an “ugly budget.” Morgan says from what he’s seen, drops in auto sales and other goods, Tennessee is in a recession.

“Revenue from building supplies last quarter compared to the same quarter a year ago, was down almost 12 percent. Housing permits are at the lowest level they’ve been since they began keeping numbers, in 1951 or 52. All those things combined, affect us in terms of taxes in a very serious way because our tax system is really based on consumption.”

The Funding Board meets tomorrow morning to estimate the rate of growth for state revenues for the next fiscal year. So far, the most optimistic estimate has been about two percent.

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The House is expected to meet next Tuesday and then save its last three legislative meeting days for May 13 through 15. The House and Senate are expected to meet in joint session on Monday, May 12, a meeting which won’t officially use up a legislative day.

Comptroller John Morgan says revenues deteriorated even after the state raised the per pack tax on cigarettes. He said only in the last few months have wholesalers run out of tax stamps they stockpiled at the old price before last July 1. He says if the half-year of cigarette taxes is factored out, to focus on just the old sales tax base, things are even worse.

The funding board was to meet at 8:15 a.m. Thursday.