Tennessee Department of Finance recently announced that revenues for the state of Tennessee were more than $12 million less that the budgeted estimate.
Tennessee Department of Finance and Administration Commissioner Butch Eley reported revenues for June were $1.5 billion, which is $12.5 million less than the budgeted monthly revenue estimate. A large portion of that deficit may stem from the fact that state tax revenues were $29.8 million less than the same month last year. Overall collections for the 11th month of the current fiscal year represented a negative growth rate of 1.91 percent.
“Tennesseans are cautiously increasing business and consumer activities as we move forward in an unprecedented environment,” Eley said and cautioned against panic or worry that the decline will continue. “We anticipated a slow recovery from April, when everyone was staying at home, but it’s too early to identify any patterns in revenue collections.”
June sales tax revenues, which are a reflection of retail business activity from the month of May, were $13.7 million less than the estimate from the budget and down 1.27 percent from June 2019. However, for the first 11 months of the current fiscal year, revenues are $56.4 million higher than estimated and the year-to-date growth rate for the same 11 months is 2.57 percent.
Eley also said some of June’s revenues may have actually been revenues that would have been collected earlier in the year if extensions for paying taxes and registering vehicles not been given.
“It should be noted that a sizable percentage of June revenue receipts are supported by a shift in tax burden from business, privilege, and motor vehicle registration tax payments, which were delayed to help provide support during the early phases of the pandemic,” he said. “The state will not know the full impact of the pandemic on fiscal year 2020 until the close of the fiscal year next month when corporate tax and Hall income tax filings are due.”
The state reported that motor vehicle registration revenues were $0.1 million more than the June estimate, but, on a year-to-date basis, those same revenues are $10.8 million less than the estimate. Privilege tax revenues were $10 million more than the June estimate with business tax revenues being $49.8 million more than the June estimate.
Moving forward into the next fiscal year, the legislature has passed what Eley calls a fiscally responsible spending plan that is centered around a proposal from Gov. Bill Lee. The plan outlines a prudent framework while providing the governor with tools to manage an uncertain future.
“I am very proud to have worked with the Legislature on this budget and greatly appreciate their commitment to financial stability and stalwart support of sound business management,” Eley said.
“Regardless of economic conditions, we will ensure that the state continues to plan for the worst while hoping for the best, while making sure Tennesseans continue to receive the services they need,” Eley stated.