NASHVILLE – Tennessee Department of Finance and Administration Commissioner Butch Eley recently announced that Tennessee July revenues were $1.5 billion, which is $389.4 million less than the state received in July 2020 and $286.6 million more than the budgeted estimate. The growth rate for July was negative 20.97%.
“July monthly revenue receipts exceeded budget estimates with significant sales tax growth contributing to most of the month’s overage,” Eley said. “However, there is a notable decline when comparing July to the same month last year, largely due to several extraordinary shifts in tax filing dates made last year that delayed filing deadlines from April to July in consideration of business impact in the first few months of the pandemic. Comparing July 2021 tax growth to July 2019, the monthly growth is 25.7%, which is more reflective of the economic activity.
“Overall, the state will finish the 2020-2021 fiscal year with a remarkable growth rate of 13.93% more than last year and exceeding the budgeted estimate by 20.85% before final accruals or adjustments. It’s important to note that total tax receipts for fiscal year 2020-21 are $2.1 billion more than the budgeted estimate and general fund revenues are $1.9 billion more than the budgeted estimate, when adjusting for the revised revenue estimate recommended by the November 2020 funding board and passed by the General Assembly.
“Even as the state finishes the year with a sizable balance, future growth remains a concern. Thus, we will continue to monitor national and global economic indicators to manage our spending and revenue collections appropriately.”
On an accrual basis, July is the final month in the 2020-2021 fiscal year and reported revenues will be subject to final accrual adjustments that may increase or decrease the recorded cash amounts on an audited basis.
General fund revenues were more than the budgeted estimates in the amount of $260.9 million and the four other funds that share in state tax revenues were $25.7 million more than the estimates.
Sales tax revenues were $246.5 million more than the estimate for July and were 20.75% more than July 2020. For the year, revenues are $1,903.4 million higher than estimated and the annual growth rate is 15.39%.
Franchise and excise tax revenues combined were $12.3 million greater than the budgeted estimate in July. The growth rate compared to July 2020 was negative 83.06%, due to an extension of tax deadlines in 2020 that allowed payments normally received in April 2020 to be paid in July of that year. The Department of Revenue announced the extension at the onset of the pandemic, as reflected in their announcement from March 2020. For the year, revenues are $1,056.7 million more than the estimate and the annual growth rate is 21.18%.
Gasoline and motor fuel revenues for July increased by 8.66% compared to July 2020, and they were $8.2 million more than the budgeted estimate of $106.2 million. For the year, revenues exceeded estimates by $2.1 million.
Motor vehicle registration revenues were $2.4 million more than the July estimate, and on a year-to-date basis, revenues are $18.8 million more than the estimate.
Tobacco tax revenues were $1.1 million more than the July budgeted estimate of $19.7 million. For the year, they are $16.8 million more than the budgeted estimate.
Hall income tax revenues for July were $0.2 million less than the budgeted estimate. August through July, revenues are $22.4 million less than the budgeted estimate.
Privilege tax revenues were $14.9 million more than the July estimate, and on a year-to-date basis, August through July, revenues are $114 million more than the estimate.
Business tax revenues were $0.1 million less than the July estimate of $10.5 million. For the year, revenues are $44.1 million more than the budgeted estimate.
Mixed drink, or Liquor-by-the-drink, taxes were $2 million more than the July estimate. For the year, revenues are $19.7 million less than the budgeted estimate.
All other tax revenues were less than estimates by a net of $0.5 million.
For fiscal year 2021, revenues were $3,103.5 million more than the budgeted estimate. The general fund recorded $2,957.2 million more than the budgeted estimate and the four other funds were $146.3 million more than estimated.
The budgeted revenue estimates for 2020-2021 are based on the State Funding Board’s consensus recommendation of Nov. 26, 2019 and adopted by the second session of the 111th General Assembly in June 2020. Also incorporated in the estimates are any changes in revenue enacted during the 2020 session of the General Assembly. These estimates are available on the state’s website at https://www.tn.gov/content/tn/finance/fa/fa-budget-information/fa-budget-rev.html.
On Nov. 18, 2020, the State Funding Board met again to hear updated revenue projections from various state economists. Following this meeting, on Nov. 24, 2020, the board decided to adopt revised revenue growth ranges for the current fiscal year. The recurring growth ranges adopted include a low of 1.00% to a high of 1.20% for total taxes and a recurring range low of 1.50% to a high of 1.75% for general fund taxes.
On April 29, 2021, in the first session of the 112th General Assembly, the Legislature passed the 2021-2022 budget, which included the Funding Board’s revised revenue ranges for the current year. Upon passage, an additional $1,034.1 million in total funds and $1,068.9 million in general fund revenue were added to this year’s original budgeted estimates. Public Chapter 454, known as the appropriations bill, was signed by Gov. Lee on May 17, 2021.