Tennessee Department of Finance and Administration Commissioner Butch Eley announced Monday, June 8 that revenues for May were $981.9 million, which is $197.3 million less than the budgeted monthly revenue estimate.
State tax revenues were $184.7 million less than May 2019, and the overall revenue for the month represented a negative growth rate of 15.83%.
“May sales tax collections represent consumer spending that occurred during April, when Tennesseans were staying at home and many businesses were closed in response to the COVID-19 pandemic,” Commissioner Eley said. “While sales of autos, apparel, furniture, and restaurants dropped extensively, building materials and food stores sales experienced considerable growth. The state also realized large drops in gasoline tax receipts, motor vehicle title and registration taxes, and mixed drink revenues.
“We responded quickly to develop plans that would mitigate revenue shortfalls at the outset of the pandemic and now the work begins to bring spending in line with what economists predict we will experience.
“We are encouraged about the improving employment numbers in Tennessee and while we hope for solid recovery trends, we are preparing for a longer and slower growth period, managing our budget conservatively as we work to help all of Tennessee recover from this unprecedented economy.”
As previously noted last month, Tennessee Department of Revenue extended the due date for certain taxes on April 6, and the extensions 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, May is the 10th month in the 2019-2020 fiscal year.
General fund revenues were less than the budgeted estimates in the amount of $144 million, and the four other funds that share in state tax revenues were $53.3 million less than the estimates.
Sales tax revenues were $112.3 million less than the estimate for May and were 13.36% less than May 2019. For 10 months, revenues are $70.1 million higher than estimated. The year-to-date growth rate is 2.97%.
Franchise and excise tax revenues combined were $2.2 million lower than the budgeted estimate in May, and the growth rate compared to May 2019 was negative 10.25%. For 10 months, revenues are $251.4 million less than the estimate and the year-to-date growth rate is negative 16.31%.
Gasoline and motor fuel revenues for May decreased by 28.41% compared to May 2019, and they were $33 million less than the budgeted estimate of $102.7 million. For 10 months, revenues have exceeded estimates by $0.4 million.
Tobacco tax revenues were $1.8 million less than the May budgeted estimate of $21.1 million. For 10 months, they are $0.4 million less than the budgeted estimate.
Hall income tax revenues for May were $2.5 million more than the budgeted estimate. For 10 months, revenues are $52.9 million less than the budgeted estimate.
Privilege tax revenues were $29.2 million less than the May estimate, and on a year-to-date basis, August through May, revenues are $5.2 million more than the estimate.
Business tax revenues were $1.4 million less than the May estimate. For 10 months, revenues are $42.4 million less than the budgeted estimate.
Motor vehicle registration revenues were $9.3 million less than the May estimate, and on a year-to-date basis, revenues are $10.9 million less than the estimate.
Mixed drink, or Liquor-by-the-drink, taxes were $10.7 million less than the May estimate as on-premise drinking establishments were closed. For 10 months, revenues are $8.7 million less than the budgeted estimate.
All other tax revenues exceeded estimates by a net of $0.1 million.
Year-to-date revenues for 10 months were $285.4 million less than the budgeted estimate. The general fund recorded $308.2 million less than the budgeted estimate, and the four other funds were $22.8 million more than estimated.
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 3.1% 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.