Department of Finance and Administration Commissioner Stuart McWhorter announced Wednesday that Tennessee’s June revenues were $92.5 million more than the state budgeted for the month, resulting in a total budget surplus of $649.2 million with just one month remaining in the 2018-2019 fiscal year.
The state’s revenue collections of $1.6 billion for the month of June, which is the eleventh month of the year on an accrual basis, were $115.3 million more than collected in June of 2018.
McWhorter acknowledged that total revenues in June “were notably higher than expected,” which confirms the strength of the Tennessee economy, he said.
Revenues have exceeded the budgeted estimates all 11 months of the current fiscal year, with surpluses ranging from a low of $3.2 million in October 2018 to the high of $258.9 million in April 2019. April’s excess revenues alone account for nearly 40 percent of the year-to-date budget surplus.
June’s surplus puts revenues to the state 4.8 percent ahead of the budget and 5.6 percent ahead of this time last fiscal year.
The Franchise and Excise Tax plus the Sales and Use Tax make up about 80 percent of the State’s total revenues as well as the budget surplus in terms of actual dollars.
Meanwhile, by percentage, the Coin-Operated Amusement, Income, Business and Mixed Drink taxes were the most over budget at 71, 28, 13 and 11 percent, respectively.
The major tax categories contributing to Tennessee’s $649.2 million year-to-date surplus are:
Sales & Use – $292 million or 3.5 percent over budget
Franchise & Excise – $229 million or 9.4 percent over budget
Income – $44 million or 28 percent over budget
Motor Vehicle Registration – $27 million or 9.3 percent over budget
Business – $23 million or 13.4 percent over budget
Mixed Drink – $11.8 million or 10.6 percent over budget
The tax revenues for gasoline and diesel continue to grow beyond the budgeted estimates as a result of the passage of the fuel-tax increasing IMPROVE – Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy – Act in 2017.
Gas tax revenues are up over the budget by a half million dollars and diesel up $3.67 million or 1.6 percent for the 11 months in the current budget year.
Fuel taxes increased once again on July 1, 2019, with gasoline going up another $0.01 per gallon and diesel by an additional $0.03 per gallon. July 1, 2019 marked the third installment on the fuel tax increases, which went up by a total of $0.06 on gas and $0.10 on diesel in accordance with the mandates in the 2017 IMPROVE Act.
The impact of the recent fuel tax increases will be reported in September.
Tax revenues for fiscal year 2018-2019 were down for the state in just five categories, putting them off the budgeted estimates by a total of $6.5 million:
Tobacco – $4.5 million or -1.96 percent
Gross Receipts – $1.2 million or –8.6 percent
Motor Vehicle Title – $448,000 or -2 percent
Beer – $251,000 or -1.5 percent
Severance – $71,000 or -7 percent
The budgeted revenue estimates for fiscal year 2018-2019 were based on the State Funding Board’s consensus recommendation in November 2017 and adopted in May 2018 by the second session of the 110th Tennessee General Assembly.
The 111th General Assembly passed Governor Bill Lee’s first budget for the upcoming 2019-2020 fiscal year on April 30 which was then signed by the Governor on May 17, 2019.
With the Legislature’s passage of the appropriations act, $161 million in budget surplus was recognized from the current fiscal year, according to the press release.
McWhorter, as a Gov. Lee appointee serving in his first year as Department of Finance and Administration Commissioner, concludes in his announcement, “With one revenue reporting month remaining in the 2018-2019 fiscal year, the state should outperform the revenue estimates for the year.”
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