The May revenues announced by Tennessee Department of Finance and Administration Commissioner Butch Eley Monday showed a negative growth rate of 15.83 percent compared to a year ago.
The state’s revenues of $981.9 million were $197.3 million less than budgeted and $184.7 million less than May 2019, according to the department’s news release.
Commissioner Eley summarized the results in the release as well as to the House Finance, Ways & Means (FW&M) Committee during a Monday afternoon meeting, “May sales tax collections represent consumer spending that occurred during April, when Tennesseans were staying at home and many businesses were closed in response to the COVID-19 pandemic.”
While Governor Bill Lee’s stay-at-home order was in effect for the month of April, 89 of Tennessee’s 95 counties that fall under the Tennessee Department of Health began the reopening process on May 1.
The state’s largest source of revenue, sales and use tax, was off by $112 million or 14 percent from the budgeted $799 million for the month and 13 percent behind May 2019.
For the 10 months of the current year, though, sales and use tax is ahead of the budget by almost a percent and ahead of last year to date by nearly three percent.
Commissioner Eley offered additional insight on sales tax revenues, “While sales of autos, apparel, furniture and restaurants dropped extensively, building materials and food stores sales experienced considerable growth.” He told the House FW&M Committee, though, the positive growth in some areas was not enough to offset the losses in the other areas.
Franchise and excise tax, the state’s second highest revenue source, was $2 million or 3.5 percent off the budgeted $63 million for May and behind May of last year by 10 percent.
For the year, F&E tax is 12 percent behind the budgeted $2.1 billion and 16 percent behind last year.
In light of the COVID-19 pandemic, the Tennessee Department of Revenue announced at the end of March that the filing deadline for the F&E tax was extended from April 15 to July 15. Commissioner Eley told the House FW&M Committee that the April numbers were so bad because of that extension, and they hope to get those taxes in later in the year.
The only revenues that hit the budgeted targets for the month were the income tax, TVA payments in lieu of taxes, alcoholic beverage, mineral severance, and coin-operated amusement.
Revenues from all fuel taxes, tobacco, beer, motor vehicle title and registration, mixed drink, business, privilege and gross receipts were off for the month of May.
For the year, the state’s revenues are down by $285 million or 2.25 percent as compared to the budgeted projections.
On March 19, the General Assembly passed budgets that reflected the State Funding Board’s revised ranges for the current year and a reduction of $153.8 of projected revenue for the upcoming fiscal year, in order to address the economic impact from the COVID-19 pandemic.
“We responded quickly to develop plans that would mitigate revenue shortfalls at the outset of the pandemic and now the work begins to bring spending in line with what economists predict we will experience,” said Commissioner Eley.
Commissioner Eley also expressed optimism about other economic indicators and the efforts in managing the economic impact of COVID-19.
“We are encouraged about the improving employment numbers in Tennessee and while we hope for solid recovery trends, we are preparing for a longer and slower growth period, managing our budget conservatively as we work to help all of Tennessee recover from this unprecedented economy.”
Laura Baigert is a senior reporter at The Tennessee Star.