May revenues less than estimated

Earlier this month, Tennessee Department of Finance and Administration Commissioner Butch Eley announced that revenues for May were almost $200 million less than estimated. Actual revenues for the month of May, during the phased reopening of the state as Tennesseans try to maneuver a new normal after the introduction of COVID-19, were $981.9 million, which is $197.3 million less than the budgeted monthly revenue estimate and were $184.7 million less than May 2019. The overall revenue for the 10th month of the 2019-2020 fiscal year represented a negative growth rate of 15.83 percent. “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,” 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.” Sales tax revenues were $112.3 million less than the estimate for May. White County reported a collection of $1,559,551.06 in state sales tax and a total of $558,506.94 in local sales tax for the month of May 2020. The state total was a little more than 13 percent less than the same calendar month last year. Business tax revenues were $1.4 million less than the May estimate, and for the first ten months of the fiscal year, revenues are $42.4 million less than the budgeted estimate. White County collected $231,412.13 in business taxes during the month of May. Other tax revenues that were listed as less than budgeted by the state are as follows: 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. 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 percent. For ten months, revenues are $251.4 million less than the estimate and the year-to-date growth rate is negative 16.31 percent. Gasoline and motor fuel revenues for May decreased by 28.41 percent compared to May 2019, and they were $33 million less than the budgeted estimate of $102.7 million. For ten 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 ten months, they are $0.4 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. Motor vehicle registration revenues were $9.3 million less than the May estimate, with White County 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 ten months, revenues are $8.7 million less than the budgeted estimate. Hall income tax revenues, state tax on interest and dividend income from investments, for May were $2.5 million more than the budgeted estimate, although for the first 10 months of the 2019-2020 fiscal year, revenues are $52.9 million less than the budgeted estimate. All other tax revenues exceeded estimates by a net of $0.1 million. Overall, Year-to-date revenues for the first ten months of the Fiscal Year are $285.4 million less than the budgeted estimate. NOTE: The Tennessee Department of Revenue extended the due date for certain taxes on April 6, 2020 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.