NASHVILLE, Tenn. (WKRN) — Since reopening the state back up after COVID-19, Tennessee has done pretty well when it comes to economic growth.

“State collections have been off the chart,” Dr. Don Bruce said. “We saw really two years of back-to-back double-digit growth in collections.”

Bruce heads up the University of Tennessee, Knoxville’s (UT) Boyd Center of Economic Research.

The state’s growth nearly actually went backward for the first time in recent memory back in August.

“We certainly know that that will normalize at some point, and we’re beginning to see the normalization of that,” Gov. Bill Lee (R-Tennessee) said. “We all knew that would occur.”

There’s good news and bad news.

The good news is that the state collected more revenue this September than last. The bad news is that it came up short of projections and is a sign that Tennessee’s torrid growth is slowing.

In the month, the state was only about $7 million short of projections after being nearly $40 million short in August. Relatively speaking, those numbers are pretty small, but they’re indicators of larger trends. In July, the state netted over $150 million more than budgeted.

Some economists point to an unsustainable housing market.

“It’s when you see the significantly higher mortgage rates, slowing down mortgage-related transactions,” Dr. Murat Arik said. Construction, real estate-related transactions, and of course, overall, when you have that element going on, it’s a spillover effect.”

Arik is the Director for the Middle Tennessee State University Business and Economic Research Center.

The slowdown trend begs one big question: What will the state do to keep on track?

“What we’ll do is we’ll plan accordingly, right? It’s like anybody managing any budget,” Lee said. “When you know what your revenues are, you make sure that you don’t spend more than those revenues.”

It’s a pretty simple solution, but unfortunately, money has to come from somewhere, meaning you might see cuts of excess spending in the next fiscal year.

“I think the message to policymakers is the good ole days are, in some sense, over,” Bruce said. “We need to get back to business as usual, and I think we’re in a good position to do that.”

Bruce said he doesn’t believe this is a crisis situation, but it is something to monitor moving forward.

Interestingly, the lower numbers come after state leaders floated the idea of denying federal education funding.

News 2 did reach out to ask the Department of Finance and Administration for an interview.

The department responded and said staff likely wouldn’t want to comment because, “they don’t make the higher-level decisions on budgeting; they carry out the will of the state.”