Where Did the Money Go?

While sales tax collections are up this year, the state faces a budget shortfall in business taxes. There is growing concern that several large national and international companies in Tennessee have figured out a loophole that drastically cuts the amount owed for franchise and excise taxes.

In past years Gov. Phil Bredesen and his Revenue Commissioner would have a “technical corrections bill” each year that effectively closed loopholes as soon as company CPAs found them. At the end of his eight years in office, tax collections had increased by $1 billion.

April is usually the month when most of the franchise and excise taxes are collected, and the state budget is scheduled to be passed and the Legislature adjourned before the final figures are in.

The state Revenue Department will have a better handle on the situation in May. Haslam would have the discretion to spend any surplus money collected.

There is some discussion about having a veto override session this summer in the event Haslam vetoes any favorite legislative initiatives—like a Common Core compromise.

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