The state Funding Board meets this week to hear from economists on what kind of growth the state can expect next year. The outlook for jobs remains weak.
Tennessee economist Bill Fox is forecasting slightly more tax revenue next year. He made his projections to the state Funding Board last week. But Fox isn’t as optimistic about jobs.
He says businesses have gotten used to producing more with fewer workers for the last two years.
“It is so far, truly a jobless recovery. I don’t think it will be forever, but we don’t expect a lot of job growth this year. It will be positive but few jobs. If you’re looking for a job, it’s still not a great time period, despite the fact that the recession is over.”
While the unemployment rate has been steady at more than 10 percent for the last two months, that doesn’t mean there hasn’t been some job growth.
Fox says employment is picking up. But people who previously dropped out of the workforce are now encouraged enough to start looking for jobs again, keeping the unemployment rate unchanged.
The State Funding Board hears from economists Wednesday.
The Funding Board, made up of the Comptroller, the Treasurer, the Secretary of State and the Finance and Administration Commissioner, has to calculate how much growth to expect from state revenues. That in turns sets the ceiling for how big the state budget can be the following year.
For instance, Dr. Fox last week projected an overall growth in revenues of 2.4% for the year beginning July 1. That means the state can expect a top figure of $10.2 billion. By comparison, this year the state is expected to clear about $9.9 billion.
Wednesday the panel hears from Dr. Albert DePrince, professor of economics and finance at Middle Tennessee State University.
Also scheduled to appear is Dr. Arthur Laffer, CEO of Laffer Associates and a member of President Ronald Reagan’s Economic Policy Advisory Board in the 1970s.
Laffer is the supply-side economic thinker who proposed the “Laffer curve,” the idea that cutting taxes can increase tax revenues.
The Funding Board has posted its agenda for the week’s work.
Fox is the chief economic thinker at the University of Tennessee’s Center for Business and Economic Research, a researcher who works all over the United States and Europe. He is the official economist for the state and his testimony last week led off the presentations.
Fox says the economy produced by the last two years has enforced stricter standards of productivity on businesses.
“It’s been a really important distinction here. Businesses are producing again, and they’re able to do that because they have become more productive. Which just means they’re able to produce more, with fewer workers.
“Now as we go into the expansion time period businesses are taking advantage of this higher level of productivity. They’ve expanded their production without yet adding any significant numbers of new workers.”
Tennessee’s February unemployment rate stayed level at 10.7%, as outlined in this Department of Labor news release.