A University of Tennessee economist announced last week Tennessee's
December revenue collections exceeded predictions, totaling $502 million --
$6 million above projected figures for the month, an increase of 6.2
percent compared with the same month last year.

"December was an exceptionally strong month for revenue collections," said
Matt Murray of the UT Center for Business and Economic Research.

Year-to-date collections, with five months counted, are also up 6 percent
for the same period a year ago, totaling $2.56 billion.

"Yet sales in November in Tennessee were up almost 5 percent, while
nationally sales were up only 2 percent," Murray said. "We are not seeing

deterioration in the state's revenue performance."

However, economists predict a decline in revenue growth because Tennessee's
economy is slowing. According to Murray, the state has performed poorly
both in terms of job creation and growth in per capita personal income
compared to national figures.

"There is a sharp incongruity between the state's economic performance --
the slow growth in income and job creation -- and the sustained increase in
tax revenues, particularly within the sales tax," he said.

Sales tax collections are Tennessee's primary revenue source, and
collections were up an adjusted 4.9 percent over last December.

According to Murray, these December's sales tax collections were up 7.5
percent without the adjustment due to an extra payment to the state by a
large retailer.

"If there is an adjustment, my guess is it will come on the side of
revenues and that the revenue growth for the state will slow as we move
further into the year," Murray said.