Tennessee Budget Woes
Bill Hobbs reports that Tennessee’s YTD revenue exceeds budget by $260.8M. Further, he comments:
Still, taxpayers shouldn’t bother getting too excited by the big surplus. There are no plans for a tax rebate or reducing the sales tax or removing the sales tax from groceries.
Instead, the Bredesen administration plans to spend the excess revenue.
Exceeding your budget is not technically a surplus. It just means you’re over your budget. A surplus occurs when revenues exceed expenses. So, if there is (using Bill’s term) an expense surplus (which I’d bet there is) that exceeds the revenue surplus, then Tennessee is still in the red. If the state is in the red, there won’t (and shouldn’t) be a rebate. They do have bills to pay. All this means is that they were off budget. Heck, who isn’t?
To put it in perspective, imagine your company having a good year. You’re over budget in sales by about $260M. Now, you’re not going to turn down sales and state that would mess up your budget. Assume your margin is about 10%, so you also have costs of about $235M. Your surplus compared to budgeted surplus is really only $25M.
