NASHVILLE – Department of Finance and Administration Commissioner Butch Eley announced recently that Tennessee tax revenues exceeded budgeted estimates in March. Overall March revenues totaled $1.2 billion, which is $71.3 million more than the state received in March of 2019 and $62.1 million more than the budgeted estimate for the month.
“Tennessee tax revenues exceeded estimates for the month of March, which will likely surprise some, given the current economy,” Eley said. “This monthly report clearly illustrates the inherent lag between reported tax receipts and that of actual economic activity, or lack thereof, which many Tennesseans are facing today. For instance, sales tax collections for the month of March represent February consumer activity.
“The eventual impacts of COVID-19 on tax revenues are unavoidable and will begin to appear in the coming months. We will closely monitor our tax receipts during this time and remain committed to balancing the state’s budget in a responsible manner during this extraordinary national economic downturn.”
On an accrual basis, March is the eighth month in the 2019-2020 fiscal year.
General fund revenues were $56.5 million more than the budgeted estimate while the four other funds that share in state tax revenues were $5.6 million more than the estimates.
Sales tax revenues were $5.9 million more than the estimate for March and were 2.28% more than March 2019. For eight months revenues are $243.6 million more than estimated. The year-to-date growth rate for eight months was 6.25%.
Franchise and excise tax revenues combined were $35.4 million more than the budgeted estimate in March and the growth rate was 15.76%. For eight months, revenues are $237.4 million more than the estimate and the year-to-date growth rate is 17.06%.
Gasoline and motor fuel revenues for March increased by 13.48% compared to March 2019 and were $5 million more than the budgeted estimate of $84.1 million. For eight months, revenues have exceeded estimates by $39 million.
Motor vehicle registration revenues were $1.3 million less than the March estimate, and on a year-to-date basis they are $9.3 million more than estimates.
Tobacco tax revenues were $5.4 million more than the March budgeted estimate of $19.4 million. For eight months, revenues are $4.5 million more than the year-to-date budgeted estimate.
Privilege tax revenues were $7.1 million more than the March estimate. On a year-to-date basis, August through March, revenues are $41.6 million more than the estimate.
Business tax revenues were $1.5 million more than the March estimate. For eight months, revenues are $9.4 million more than the budgeted estimate.
Hall income tax revenues for the month were $1.9 million more than the budgeted estimate. For eight months, revenues are $6.5 million more than the budgeted estimate.
All other taxes were less than budgeted estimates by a net of $1.2 million.
Year-to-date revenues, August through March, are $605.7 million more than the budgeted estimate. The growth rate for eight months is 8.03%. General fund revenues are $486.7 million more than the budgeted estimate and the four other funds are $119 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 3.10% to a high of 3.60% for total taxes and a recurring range low of 3.20% 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 budget 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.