NASHVILLE, Tenn. – Tennessee Department of Finance and Administration Commissioner Butch Eley today announced that overall January state tax revenues exceeded budgeted estimates. Revenues for January totaled $1.67 billion, which is $380.1 million more than budgeted and 7.66 percent greater than revenues received in January 2020.
“January sales tax revenues, reflecting consumer spending during the December 2020 Christmas shopping season, were incredibly strong,” Eley said. “Notably, taxable sales in the second quarter of the current fiscal year increased 7.85 percent compared to the same quarter last year. Consumers continue to focus spending growth on items such as building materials, auto sales and groceries, but a large part of the state’s sales tax growth can be credited to the impact of the state’s marketplace facilitator law. As much as 3.4 percent of January’s sales tax growth can be attributed to this newly expanded tax base which is a reflection of internet sales, and nearly 2.4 percent of all sales tax growth for the year is due to the law change. Corporate tax revenues also had solid growth compared to last January, while all other taxes, taken as a whole, were near even.
“At this time, the economic growth we have experienced in these first six months puts the state in a good fiscal position to fund the current and upcoming fiscal year budgets. Nevertheless, we will continue to closely monitor our monthly receipts, being mindful there are still uncertainties and that economic conditions could change.”
On an accrual basis, January is the sixth month in the 2020-2021 fiscal year.
General fund revenues were greater than the budgeted estimates in the amount of $361.7 million while the four other funds that share in state tax revenues were $18.4 million more than the estimates.
Sales tax revenues were $297.8 million more than the estimate for January and the growth rate was 9.43 percent. For six months, revenues are $733.2 million higher than estimated. The year-to-date growth rate for six months is 5.88 percent.
Franchise and excise tax revenues were $74.2 million more than the January budgeted estimate. The growth rate compared to January 2020 was 8.07 percent. Year-to-date franchise and excise tax revenues for the first six months of this year are 4.25 percent higher than this same time last year and $333.8 million more than estimated.
Gasoline and motor fuel revenues for January were mostly flat compared to January 2020 and were $0.5 million less than the budgeted estimate of $104.5 million. For six months, revenues are less than estimates by $13 million.
Motor vehicle registration revenues were $2.2 million more than the January estimate, and on a year-to-date basis exceed estimates by $12.5 million.
Tobacco tax revenues were $1.5 million less than the budgeted estimate of $17.9 million, and for six months they are $9.3 million more than the budgeted estimate.
Privilege tax revenues were $9.4 million more than the January estimate, and on a year-to-date basis, August through January, revenues are $44.3 million more than the estimate.
Business tax revenues were $4.7 million more than the January estimate. For six months revenues are $14.9 million more than the budgeted estimate.
Hall income tax revenues were $0.4 million less than the budgeted estimate.
Mixed drink, or liquor-by-the-drink, taxes were $4 million less than the January estimate, and on a year-to-date basis, revenues are 19.4 million less than the budgeted estimate.
All other taxes were less than estimates by a net of $1.8 million.
Year-to-date revenues for six months were $1.11 billion more than the budgeted estimate. The general fund recorded $1.08 billion in revenues more than estimates, and the four other funds totaled $35.7 million more than year-to-date estimates.
The budgeted revenue estimates for 2020-2021 are based on the State Funding Board’s consensus recommendation of November 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.