Thursday, May 08, 2008

Tennessee Governor: Tax collections "deteriorating dramatically"

by Calculated Risk on 5/08/2008 01:21:00 PM

From The Chattanoogan.com: State Cutting Over 2,000 Jobs Due To Tax Shortfall (hat tip JKB)

Gov. Phil Bredesen said Wednesday that state tax collections have been "deteriorating dramatically" in recent months...

... he said April tax collections showed the largest drop since records began to be kept in 1961.

He said the first quarter was the third worst on record, and the second quarter "is certainly shaping up to be worse than that."
This is more evidence that the economic slowdown is spreading beyond the 'bubble' states (like California and Florida) and impacting state and local government tax revenue in other states too.

The article mentions that Tennessee is cutting 5% of their state workforce. This is the typical negative feedback loop at the beginning of a recession: a weak economy leads to less tax revenue leads to state and local job cuts that further weakens the economy.