The state’s revenue collections for the month of January remained strong, resulting in a $129.4 surplus over the budgeted estimate of $1.55 billion, Tennessee Department of Finance and Administration Commissioner Stuart McWhorter reported Friday.
Six months into the year, the surplus is up to $480 million on a budgeted estimate of $7.4 billion. That puts year-to-date revenues 6.5 percent ahead of expectations and 8.5 percent ahead of this time last year.
Commissioner McWhorter offered a positive outlook for the remainder of the fiscal year.
“The economic growth we have experienced in these first six months puts the state in a good position to fund the current and upcoming fiscal years. The year-to-date total tax collections are currently outpacing estimates by 6.48 percent, which signals a promising finish for the 2020 fiscal year.”
For the month, January revenues were nearly 12 percent ahead of last January and 9 percent ahead of the budgeted estimate.
This, despite the fact that January’s estimated revenues at $1.423 billion are the fourth highest in the 2019-2020 fiscal year, which runs July 1, 2019, through June 30, 2020.
Sales tax, the state’s largest revenue source, was $72 million or 7-plus percent over the budgeted estimate and 11 percent ahead of last January.
“January sales tax revenues, reflecting consumer spending that occurred during December, remain strong and represented 34 consecutive months of positive growth,” said Commissioner McWhorter in his statement on January revenues.
The state’s second highest revenue source, franchise and excise tax, was $46 million or nearly 24 percent head of expected revenues for January and 20 percent ahead of last year.
For the year, franchise and excise tax revenues are $198 million or nearly 19 percent ahead of plan.
Also ahead of the budgeted estimates for January was the professional privilege tax by $7 million or nearly 25 percent. For the year, the professional privilege tax collections are $29 million or 17 percent in excess of the budgeted estimates.
The professional privilege tax revenues are particularly noteworthy, given that the tax was eliminated last year on 15 professions practicing in the state.
Seven professions remain on the list required to pay the $400 annual tax.
A number of groups came together this past week to lobby the Tennessee General Assembly to reduce the tax this year to $200 annually, as Governor Bill Lee included in his February 3 State of the State Address, or completely eliminate the tax, The Tennessee Star reported.
The motor vehicle registration tax contributed $3 million to the January surplus, putting those revenues 12 percent over budgeted estimates.
January revenues from the inheritance and estate, tobacco, beer, mixed drink, business, gross receipts, TVA in lieu of tax payments, alcoholic beverage, severance and coin-operated amusement taxes combined for a surplus of $3.4 million.
Meanwhile, the Hall income tax, gasoline tax, petroleum special tax, motor vehicle title and motor vehicle fuel tax combined for a shortfall of $2.4 million against the budgeted estimates for January.
For the month, all of the state’s funds are ahead of budgeted estimates, the General Fund by nearly 9 percent, the Highway Fund by almost 25 percent and the other three funds by less than three percent.
Budgeted revenue estimates for the 2019-2020 fiscal year are based on the State Funding Board’s consensus recommendations of November 27, 2018, which were subsequently adopted by the 111th Tennessee General Assembly in April 2019 and incorporate any changes in revenue enacted during the 2019 legislative session.
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Laura Baigert is a senior reporter at The Tennessee Star.