NASHVILLE – Tennessee Department of Finance and Administration Commissioner Butch Eley recently announced that revenues for June were $1.5 billion, which is $12.5 million less than the budgeted monthly revenue estimate. State tax revenues were $29.8 million less than June 2019 and overall collections for the month represented a negative growth rate of 1.91 percent.
“Tennesseans are cautiously increasing business and consumer activities as we move forward in an unprecedented environment,” Eley said. “We anticipated a slow recovery from April, when everyone was staying at home, but it’s too early to identify any patterns in revenue collections. It should be noted that a sizable percentage of June revenue receipts are supported by a shift in tax burden from business, privilege and motor vehicle registration tax payments which were delayed to help provide support during the early phases of the pandemic. The state will not know the full impact of the pandemic on fiscal year 2020 until the close of the fiscal year next month when corporate tax and Hall income tax filings are due.
“Regardless of economic conditions, we will ensure that the state continues to plan for the worst while hoping for the best, while making sure Tennesseans continue to receive the services they need.”
The Tennessee Department of Revenue extension of tax due dates can be found on their website at https://www.tn.gov/revenue/news/2020/3/31/tennessee-extends-certain-tax-deadlines-due-to-covid-19.html.
On an accrual basis, June is the eleventh month in the 2019-2020 fiscal year.
General fund revenues were greater than the budgeted estimates in the amount of $6.3 million, while the four other funds that share in state tax revenues were $18.8 million less than the estimates.
Sales tax revenues were $13.7 million less than the estimate for June and they were 1.27 percent less than June 2019. June sales tax revenues reflect retail business activity that occurred in May. For eleven months, revenues are $56.4 million higher than estimated. The year-to-date growth rate for eleven months is 2.57 percent.
Franchise and excise tax revenues combined were $40.5 million lower than the June budget estimate and the growth rate was negative 12.72 percent. For eleven months, revenues are $292 million less than the estimate and the year-to-date growth rate is negative 15.69 percent.
Gasoline and motor fuel revenues for June decreased by 10.24 percent compared to June 2019, and they were $16.3 million less than the budgeted estimate of $109 million. For eleven months, revenues have fallen behind estimates by $15.8 million.
Motor vehicle registration revenues $0.1 million more than the June estimate, and on a year-to-date basis, revenues are $10.8 million less than the estimate.
Tobacco tax revenues were $0.1 million more than the June budgeted estimate of $21.6 million. For eleven months, they are $0.4 million less than the budgeted estimate.
Hall income tax revenues for June were $5.7 million more than the budgeted estimate. For eleven months, revenues are $47.2 million less than the budgeted estimate.
Privilege tax revenues were $10 million more than the June estimate, and on a year-to-date basis, August through June, revenues are $15.2 million more than the estimate.
Business tax revenues were $49.8 million more than the June estimate. For eleven months, revenues are $7.4 million more than the budgeted estimate.
Mixed drink, or Liquor-by-the-drink, taxes were $8.1 million less than the June estimate, and on a year-to-date basis, revenues are $16.8 million less than the estimate.
All other tax revenues exceeded estimates by a net of $0.4 million.
Year-to-date revenues for eleven months are $298 million less than the budget estimate. The general fund recorded $301.9 million less than estimate and the four other funds are $3.9 million more than estimated.
The budgeted revenue estimates for 2019-2020 are based on the State Funding Board’s consensus recommendation of Nov. 26, 2018 and adopted by the second session of the 111th General Assembly in April 2019. Also incorporated in the estimates are any changes in revenue enacted during the 2019 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. 19, 2019, the State Funding Board met to hear updated revenue projections from various state economists. Following this meeting, on Nov. 26, 2019, the board decided to adopt revised revenue growth ranges for the current fiscal year. The recurring growth ranges adopted include a low of 3.1% to a high of 3.6% for total taxes and a recurring range low of 3.2% to a high of 3.75% for general fund taxes.
On March 19, 2020 in the second session of the 111th General Assembly, the Legislature passed the 2019-2020 budget, which included the Funding Board’s current year revised ranges and also the administration’s amendment to the proposed budget. The administration’s amendment, in an effort to recognize the economic impact from the COVID-19 pandemic, included a reduction of $153.8 million of previously projected revenue to acknowledge potential shortfalls. The governor signed the appropriations bill on April 2, 2020.
With the passage of the appropriations act, Public Chapter 651, the General Assembly recognized in the current fiscal year an additional $396.1 million in total revenue and a corresponding increase in general fund revenue in the amount of $345.9 million.
However, in June, the general assembly reconvened again and elected to lower revenues estimates further for the current fiscal year thereby reducing general fund estimates by $500 million. Public Chapter 760 was signed on June 30, 2020.