NASHVILLE, Tenn. – Tennessee Department of Finance and Administration Commissioner Butch Eley today announced that Tennessee tax revenues exceeded budgeted estimates in July. Overall July revenues were $1.86 billion, which is $689.4 million more than the state received in July 2019 and $667.1 million more than the budgeted estimate. The growth rate for July was 59.06 percent.
“Tax revenue receipts for July recorded significant growth compared to the same month last year and greatly exceeded budgeted estimates because tax extensions made in March resulted in large tax payments being made in July,” Eley said. “Sales and use taxes, which reflect June consumer sales activity, revealed positive progress after three straight months of negative growth with federal stimulus assistance likely supporting a significant portion of Tennessee consumer spending.
“The state will finish the 2019-2020 fiscal year 2.42 percent above last year and $369.2 million above the established budgeted estimate. Adjusting for changes adopted during the 2020 legislative session, total state revenues are $488.2 million more than the revised revenue estimate and $484.9 million more than the revised general fund estimate.
“Even as the state finishes the year with a positive revenue balance, the impact of the COVID-19 pandemic on future revenues 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 2019-2020 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 for July were greater than the budgeted estimate in the amount of $632.7 million, and the four other funds that share in state tax revenues were $34.4 million more than the estimates.
Sales tax revenues were $39.8 million more than the estimate for July and they were 6.33 percent more than July 2019. For the year, sales tax revenues are $96.2 million higher than estimated. The yearly growth rate is 2.90 percent.
Franchise and excise tax revenues combined were $520.8 million more than the budgeted estimate in July and the growth rate compared to July 2019 was 675.95 percent. For the year, revenues are $228.9 million more than the estimate and the year-to-date growth rate is 3.81 percent.
Gasoline and motor fuel revenues for July increased by 5.52 percent compared to July 2019, but they were $0.8 million less than the budgeted estimate of $106.1 million. For the year, revenues were short of estimates by $16.6 million.
Motor vehicle registration revenues were $5.2 million more than the July estimate, and for the year, revenues are $5.6 million less than the estimate.
Tobacco tax revenues were $1 million more than the July budgeted estimate of $20.8 million. August through July, revenues are $0.7 million more than the budgeted estimate.
Hall income tax revenues for July were $94.7 million more than the budgeted estimate. For the year, revenues are $47.5 million more than the budgeted estimate.
Privilege tax revenues were $6 million more than the July estimate, and for the year, August through July, revenues are $21.2 million more than the estimate.
Business tax revenues were $10.1 million more than the July estimate. For the year, revenues are $17.5 million more than the budgeted estimate.
Gross receipts revenues were $5.2 million less than the July estimate, and for the year, revenues are $4.2 million less than the estimate.
Mixed drink, or Liquor-by-the-drink, taxes were $5.5 million less than the July estimate, and for the year, revenues are $22.3 million less than the estimate.
All other tax revenues exceeded estimates by a net of $1 million.
For the year, revenues were $369.2 million more than the budgeted estimate. The general fund recorded $330.8 million more than budgeted estimates and the four other funds $38.4 million.
The budgeted revenue estimates for 2019-2020 are based on the State Funding Board’s consensus recommendation of November 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 November 19, 2019, the State Funding Board met to hear updated revenue projections from various state economists. Following this meeting, on November 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 percent to a high of 3.60 percent for total taxes and a recurring range low of 3.20 percent to a high of 3.75 percent 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 the administration’s amendment to the proposed budget. To recognize the economic impact of the COVID-19 pandemic, the administration’s amendment 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 and it became Public Chapter 651, which still recognized an additional $396.1 million in total revenue and a corresponding increase in general fund revenue in the amount of $345.9 million for FY20.
In June, the General Assembly reconvened again and, due to the unforeseen economic impact of COVID-19, elected to lower revenues estimates further for the current fiscal year thereby reducing general fund estimates by $500 million. Consequently, a revised FY 2021 budget (Public Chapter 760) was signed into law on June 30, 2020.