Tennessee Department of Finance and Administration Commissioner Butch Eley on Thursday announced that revenues for May were $1.6 billion, which is $432 million more than the budgeted monthly revenue estimate. State tax revenues were $587.3 million more than May 2020 and the overall growth rate was 59.8 percent.
“Just as April tax revenue receipts revealed substantial growth, May state tax revenues continue to reflect extraordinary increases compared to this same time last year when most economic activity was weakened because of the pandemic,” Commissioner Eley said.
“When comparing May 2021 tax growth to May 2019, the monthly growth is 34.5 percent rather than the 59.8 percent growth over May 2020.
“May sales tax revenues, reflecting April taxable sales activity, grew across all industries except for groceries and food stores, which experienced a minor reduction. Corporate taxes, represented as franchise and excise taxes, exhibited the second largest monthly growth year-to-date. Also notable is that income taxes, normally due in April, are included in this month’s receipts due to a filing deadline extension. While the year-to-date revenue balance continues to advance, we will continue adhering to the conservative management of our budget as we approach the end of the fiscal year. We must continue to acknowledge the role that federal funds and inflation are playing in this already volatile economy.”
On an accrual basis, May is the tenth month in the 2020-2021 fiscal year.
General fund revenues were more than the budgeted estimates in the amount of $392.8 million and the four other funds that share in state tax revenues were $39.2 million more than the estimates.
Sales tax revenues were $258 million more than the estimate for May and were 51.21 percent more than May 2020. For ten months, revenues are $1,483.8 million higher than estimated. The year-to-date growth rate is 14.08 percent. Remote sales and marketplace facilitator laws contributed $54.9 million to sales tax receipts in the month of April. For nine months, online sales tax revenues represent 36.55 percent of all sales tax growth to the state.
Franchise and excise tax revenues combined were $85.9 million greater than the budgeted estimate in May, and the growth rate compared to May 2020 was 127.76 percent. For ten months, revenues are $851 million more than the estimate and the year-to-date growth rate is 49.87 percent.
Gasoline and motor fuel revenues for May increased by 55.37 percent compared to May 2020, and they were $7.7 million more than the budgeted estimate of $100.7 million. For ten months, revenues are less than estimates by $11.1 million.
Hall income tax revenues for May were $36 million more than the budgeted estimate as the tax filing deadline for this tax was extended into this month. For ten months, revenues are $22.5 million less than the budgeted estimate.
Tobacco tax revenues were $5 million more than the May budgeted estimate of $19 million. For ten months, they are $14.6 million more than the budgeted estimate.
Privilege tax revenues were $29.4 million more than the May estimate, and on a year-to-date basis, August through May, revenues are $101.8 million more than the estimate.
Business tax revenues were $8.1 million more than the May estimate. For ten months, revenues are $43.2 million more than the budgeted estimate.
Motor vehicle registration revenues were $1.9 million more than the May estimate, and on a year-to-date basis, revenues are $15.5 million more than the estimate.
Mixed drink, or Liquor-by-the-drink, taxes were $0.8 million more than the May estimate. For ten months, revenues are $23.9 million less than the budgeted estimate.
All other tax revenues were less than estimates by a net of $0.8 million.
Year-to-date revenues for ten months were $2,444.6 million more than the budgeted estimate. The general fund recorded $2,339.2 million more than the budgeted estimate and the four other funds were $105.4 million more than estimated.
The budgeted revenue estimates for 2020-2021 are based on the State Funding Board’s consensus recommendation of November 26, 2019 and adopted by the second session of the 111th General Assembly in June 2020. Also incorporated in the estimates are any changes in revenue enacted during the 2020 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 18, 2020, the State Funding Board met again to hear updated revenue projections from various state economists. Following this meeting, on November 24, 2020, the board decided to adopt revised revenue growth ranges for the current fiscal year. The recurring growth ranges adopted include a low of 1.00 percent to a high of 1.20 percent for total taxes and a recurring range low of 1.50 percent to a high of 1.75 percent for general fund taxes.
On April 29, 2021, in the first session of the 112th General Assembly, the Legislature passed the 2021-2022 budget, which included the Funding Board’s revised revenue ranges for the current year. Upon passage, an additional $1,034.1 million in total funds and $1,068.9 million in general fund revenue were added to this year’s original budgeted estimates. Public Chapter 454, known as the appropriations bill, was signed by Governor Lee on May 17, 2021.