Tennessee revenues exceeded budgeted estimates for the first month of the state’s 2021-2022 fiscal year by $115.1 million, Department of Finance and Administration Commissioner Butch Eley reported Monday.
Total state revenues for August, the first month of the fiscal year on an accrual basis, were $1.16 billion, which is $22 million more than August 2019 and 11 percent more than the budgeted estimate for the month.
“Tennessee revenues exceeded expectations for the month and exhibited modest gains compared to August 2019,” said Eley.
August marks the second month in a row of post-COVID surpluses, after three consecutive months of budget shortfalls in April, May and June.
Eley attributed the positive results to strong consumer activity in some areas, “as federal stimulus resources remained a large part of the state’s strong performance.”
According to Eley, “[t]ax receipts from building material suppliers, food stores, furniture and home appliance retailers have increased significantly compared to last year.”
Meanwhile, “apparel stores, many small retailers, restaurants and bars continue to experience losses due to decreased sales activity,” said Eley.
Overall, sales tax revenues made up most of the revenue surplus at $103 million – or 13.65 percent – over the budgeted $755 million. Further demonstrating the strength of the consumer market, sales tax collections were also 3.85 percent ahead of last year.
The state’s corporate taxes – also known as the franchise and excise taxes – were off 3.75 percent compared to last year, but exceeded estimates for the month by $11.5 million – or 37.14 percent – over the budgeted estimate of $31 million.
As University of Tennessee Boyd Center for Business and Economic Research reported last week, two-thirds of the respondents to a business leaders’ survey expect the state’s economy to be better than the national economy over the next 12 months.
Further good news out of the survey was that “nobody expects to see substantial employment declines for their company over the next 12 months.”
“Over three-quarters of Tennessee business leaders report having less than 10 percent of their workforce laid off or furloughed due to COVID-19,” the report said.
“In fact, about 16 percent of business leaders indicated they have actually increased employment in the past three months,” according to Boyd Center Director Bill Fox.
Other tax revenues that exceeded budgeted estimates:
Income – up $436,000 or 39.39 percent against a budget of $1.1 million
Inheritance & Estate – up $993,000 against a budget of $0
Beer – up $53,000 or 3.3 percent against a budget of $1.6 million
Motor vehicle registration – up $4 million or 15 percent against a budget of $26 million
Motor vehicle title – up $232,000 or 11.5 percent against a budget of $2 million
Privilege – up $2.1 million or 6.7 percent against a budget of $31.3 million
Gross receipts – up $1.4 million or 10.6 percent against a budget of $13.1 million
Motor vehicle fuel – up $1.1 million or 4.8 percent against a budget of $22.7 million
Tax receipts that were below the budgeted estimates for the month:
Gasoline – off $3 million or 4 percent against a budget of $74.6 million
Petroleum special – off $372,000 or 6.1 percent against a budget of $6.1 million
Tobacco – off $946,000 or 4.7 percent against a budget of $20.3 million
Mixed drink – off $4 million or 38 percent against a budget of $10.5 million
Business – off $1 million or 11.4 percent against a budget of $9 million
Alcoholic beverage – off $328,000 or 4.6 percent against a budget of $7.2 million
The tax revenues have put the state’s General Fund $108.6 million or 15 percent ahead of the budgeted estimates.
The remaining four funds are modestly ahead of plan by a combined $6.5 million.
While Eley said they are pleased with the positive start to the fiscal year, “we will remain cautiously optimistic and continue to monitor economic activity and revenue trends to ensure fiscal stability.”
State revenue tables for August can be viewed here.
Laura Baigert is a senior reporter at The Tennessee Star.