Commissioner of the Department of Finance Administration, Stuart McWhorter, reported last week that Tennessee revenues for August were $28.8 million more than the budgeted estimates.
August is the first month of the 2020 fiscal year as well as the first month of Bill Lee’s initial budget as Governor of the state.
The $28.8 million surplus on a budgeted $1.106 billion represents an additional 2.6 percent in revenues, according to reports.
The August 2019 revenues grew by $83 million or 7.87 percent over the same period last year.
This August’s performance continues the trend from the prior year, where August 2018 revenues also realized growth over August 2017 of 7.29 percent resulting in a $34.4 million surplus over budgeted revenues.
“August revenues exceeded expectations and represent a good start to Tennessee’s new 2020 fiscal year,” McWhorter said.
“Sales and use tax receipts, reflecting consumer activity from the month of July, outperformed estimates along with corporate tax collections. Both these taxes will be closely watched throughout the fiscal year as they consist of nearly 80 percent of Tennessee’s general tax base.”
The state’s largest revenue generator – sales and use tax – had revenues of $9.1 million or 1.12 percent more than the budgeted estimate of $817 million.
The second highest contributor to the state’s revenues is the franchise and excise tax, which had revenues of $7 million or nearly 19 percent more than the budgeted $37 million.
These two taxes accounted for $16 million or 56 percent of the August surplus.
All of the other state tax collections, including income, gasoline, motor vehicle fuel, tobacco, business, privilege, gross receipts, exceeded budgeted estimates by a quarter percent up to as much as 55 percent.
The exceptions were TVA’s payment in lieu of taxes and the inheritance and estate tax which, with rounding, were at budget.
Revenues contributing $10.7 million or 37 percent of the August 2019 surplus were:
- Business tax with $3.6 million over budget
- Gasoline tax with $2.1 million over budget
- Privilege tax with $2 million over budget
- Tobacco tax with $2 million over budget
- Motor vehicle fuel tax with $1 over budget
State revenues are distributed to five funds: General, Highway, City and County, Sinking and Earmarked.
The apportionment to each fund is mandated by state law.
The state’s General Fund revenues, reported Commissioner McWhorter, were $22.9 million more than the August estimate.
The other four funds combined were $5.9 million more than estimates. Distributions of the surplus were $3.9 million to the Highway Fund and $1.9 million to the City and County Fund.
The budgeted revenue estimates are based on the State Funding Board’s November 2018 consensus recommendation and adopted by the Tennessee General Assembly in the 2019 session.
Commissioner McWhorter said, “A positive balance against the August estimate is a welcome start given the economic uncertainty reported in the national news.”
“As such, we will continue to monitor economic activity and revenue trends to ensure fiscal stability,” said Commissioner McWhorter.
Laura Baigert is a senior reporter at The Tennessee Star.