Tennessee Department of Finance and Administration Commissioner Jim Bryson today announced that January state tax revenues exceeded budgeted estimates. Revenues for January totaled $1.9 billion, which is $212.9 million more than budgeted and 6.25 percent greater than revenues received in January 2022.
“Second quarter total tax growth slowed to 5.89 percent and was lower than the 9.94 percent growth the state experienced for the first quarter of the fiscal year,” Bryson said. “We are very mindful that economic activity appears to be moderating from early elevated levels. January sales tax receipts, reflecting consumer holiday spending in December, followed reports of lower sales trends nationally - the lowest growth rate since September 2020. On a positive note, state corporate tax revenues, or franchise and excise taxes, and mixed drink taxes outperformed expectations. Still, rising interest rates have caused sharp declines in realty transfer and realty mortgage tax collections reported within privilege tax receipts. All other monthly taxes combined declined when compared to last year.
“While we are pleased with the strong revenue growth seen in the first half of this fiscal year, we remain cautious, closely monitoring economic conditions and revenue trends to ensure fiscal stability.”
On an accrual basis, January is the sixth month in the 2022-2023 fiscal year.
General fund revenues were greater than the budgeted estimates in the amount of $197.9 million while the four other funds that share in state tax revenues were $15 million more than the estimates.
Sales tax revenues were $131.4 million more than the estimate for January and the growth rate was 5.51 percent. For six months, revenues are $730 million higher than estimated. The year-to-date growth rate for six months is 8.75 percent.
Franchise and excise tax revenues were $78.6 million more than the January budgeted estimate. The growth rate compared to January 2022 was 23.18 percent. Year-to-date franchise and excise tax revenues are 14.68 percent higher than this same time last year and $394.8 million more than estimated.
Gasoline and motor fuel revenues decreased by 2.15 percent compared to January 2022 and were $3.2 million less than the budgeted estimate of $110.2 million. For six months, revenues are less than estimates by $6.5 million.
Motor vehicle registration revenues were $4.1 million more than the January estimate, and on a year-to-date basis exceed estimates by $19.7 million.
Tobacco tax revenues were $1.5 million less than the budgeted estimate of $16.3 million, and for six months are $6.9 million less than the budgeted estimate.
Privilege tax revenues were $9.2 million less than the January estimate, and on a year-to-date basis, August through January, revenues are $26 million less than the estimate.
Business tax revenues were $2 million more than the January estimate. For six months revenues are $15.5 million more than the budgeted estimate.
Mixed drink, or liquor-by-the-drink, taxes were $6.2 million more than the January estimate, and on a year-to-date basis, revenues are $32.2 million more than the budgeted estimate.
All other taxes were more than estimates by a net of $4.5 million.
Year-to-date revenues for six months were $1.2 billion more than the budgeted estimate. The general fund recorded $1.1 billion in revenues more than estimates, and the four other funds totaled $92 million more than year-to-date estimates.
The budgeted revenue estimates for 2022-2023 are based upon the State Funding Board’s consensus recommendation from November 23, 2021 and adopted by the second session of the 112th General Assembly in April 2022. Also incorporated in the estimates are any changes in revenue enacted during the 2022 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.