Three months into the 2020-2021 fiscal year, Tennessee’s actual revenues have exceeded the budget to create a $447 million surplus.
The surplus represents revenues that are 13 percent over and above the budgeted revenues through October and the fourth month in a row of budget surpluses.
The surpluses followed three months of the state’s revenues being below the budgeted estimates in April, May and June, which fell in the previous 2019-2020 fiscal year.
While the state’s revenue performance for the year is very positive, it is particularly impressive as compared to last year in light of the economic impacts of COVID-19.
In the current fiscal year, revenues are ahead of this time last fiscal year by nearly $83 million or just over two percent.
As Commissioner of Tennessee’s Department of Finance and Administration Butch Eley reported earlier this month, “Tennessee’s economy continues to recover as October’s monthly revenue growth exceeds expectations.”
Eley commented, “We are pleased to see growth over three percent from the same month last year.”
Sales and use tax, as the state’s largest revenue source, far exceeded expectations at $111 million or 15 percent over budget for October and more than 12 percent ahead for the year.
October’s growth rate in sales tax revenues was 5.81 percent with a year-to-date growth rate of 3.73 percent, Eley reported.
Franchise and excise tax, the state’s second highest revenue sources, was $11.7 million or 26.8 percent ahead of October’s expectations and 31.3 percent ahead for the year.
Meanwhile, the state’s third highest revenue source of gasoline tax was slightly ahead of budget for the month, but is behind for the year.
Other revenue sources that make up the remaining 15 to 20 percent of the state’s budget that exceeded budget for October as well as the year to date are the income, beer, motor vehicle registration, business, privilege and alcoholic beverage taxes.
The mixed drink tax is off the most in terms of dollars and percentage at minus $3 million and 27 percent for the month and minus $10.6 million and 32.6 percent for the year.
The state’s four major funds are all ahead of plan for the year, although the Highway Fund is a little over nine percent off from this time last year.
“Even though we are presently exceeding expectations,” Eley cautioned, “we will continue to proceed cautiously and closely monitor our revenue and expenditure patterns for the remainder of the fiscal year.”
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Laura Baigert is a senior reporter at The Tennessee Star.