Tennessee Department of Finance and Administration Commissioner Larry Martin Tuesday announced that overall January state tax revenues posted less than expected, while year-to-date state revenues remain more than budgeted. Revenues for January totaled $1.4 billion, and were 3.18 percent less than revenues received in the same time period one year ago, and were $25 million less than budgeted.
“The negative growth recorded in total tax revenues for January, when adjusted for one-time revenues received in 2017 and 2018, reflect an underlying positive growth of 2.62 percent for the month,” Commissioner Martin said. “Sales tax revenues, which reflect Christmas holiday retail activity occurring in December, recorded less than normally expected growth and were also less than the budgeted estimate. Corporate tax revenues posted negative growth of 35.31 percent, but reflect positive growth of 6.52 percent after adjusting for a one-time payment received in 2017. The substantial gain in the Hall income tax is thought to be driven by the pre-payment of 2017 taxes due to recent changes in the federal tax code. All other revenues, taken as a group, exceeded the budgeted estimates for January.”
General fund revenues were less than the budgeted estimates in the amount of $36.6 million while the four other funds that share in state tax revenues were $11.6 million more than the estimates.
Sales tax revenues were $10.1 million less than the estimate for January and the growth rate was 1 percent. For six months revenues are $39.6 million higher than estimated. The year-to-date growth rate for six months is 3.86 percent.
Franchise and excise tax revenues combined were $48.4 million less than the January budgeted estimate. The growth rate over January 2017 was negative 35.31 percent. This month’s negative growth is largely due to a one-time payment received in January 2017. Again, after adjusting for the January 2017 payment, the underlying growth rate is a positive 6.52 percent. Year-to-date franchise and excise tax revenues for the first six months of this year are $59.5 million more than estimated. The growth rate is negative 7.18 percent. However, when adjusted for large one-time payments received in both last year and this year, the underlying year-to date growth is a positive 4.64 percent.
Gasoline and motor fuel revenues for January increased by 12.01 percent compared to January 2017 and were flat compared to the budgeted estimate of $90.6 million. For six months, revenues are more than estimates by $13.1 million.
Tobacco tax revenues were $1.3 million less than the budgeted estimate of $20.7 million, and for six months they are $2.5 million less than the budgeted estimate.
Inheritance and estate tax revenues were more than estimates by $0.2 million for the month. Year-to-date revenues for six months are $1.9 million less than the budgeted estimate.
Privilege tax revenues were $1.2 million more than the January estimate, and on a year-to-date basis, August through January, revenues are $6.9 million more than the estimate.
Business tax revenues were $0.6 million more than the January estimate. For six months revenues are $2.0 million more than the budgeted estimate.
Hall income tax revenues, including the very large estimated pre-payment of 2017 taxes, were $33.8 million more than the budgeted estimate.
All other taxes were below estimates by a net of $1.0 million.
Year-to-date revenues, which include substantial pre-payments of 2017 Hall income taxes and a large one-time franchise and excise tax payment for this year, were $185.1 million more than the budgeted estimate. The general fund recorded $136.1 million more than budgeted estimates and the four other funds that share state tax revenues were $49.0 million in above the estimates.
The budgeted revenue estimates for 2017-2018 are based on the State Funding Board’s consensus recommendation of November 29, 2016 and adopted by the first session of the 110th General Assembly in May 2017. Also incorporated in the estimates are any changes in revenue enacted during the 2017 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.