Higher than expected revenues for the month of April resulted in the state’s budget surplus exceeding $2 billion with three months remaining in the 2020-2021 fiscal year.
Commissioner of Tennessee’s Department of Finance and Administration Butch Eley made the announcement Friday that April revenues of $2.5 billion resulted in a $596.7 million surplus for the month of April 2021.
That’s the highest surplus in revenues the state has collected in the past nine months, with April contributing almost 30 percent to the fiscal year-to-date surplus.
The state has realized revenue surpluses in all of the previous nine months, after suffering three consecutive pandemic-related budget shortfalls in April, May and June of 2020.
Eley, in his monthly announcement, said April 2021 revenues compared to the same time last year were $1.3 billion more than April 2020, reflecting a growth rate of nearly 91 percent.
Adding context, though, Eley said, “It’s important to remember that March and April of 2020 were the only two months where the state experienced a negative growth rate for collections during the pandemic.”
In an effort to make a more realistic analysis, Eley said they looked at tax collections for April 2019 as compared to April 2021 which still showed a healthy rate in tax growth of 15 percent.
Sales tax collections, the state’s highest revenue source, were 36 percent higher than budgeted, contributing $285 million to April’s surplus and $1.226 billion to the fiscal year surplus.
“Sales tax collections continue to reflect strong consumer activity and increased inflationary pressures that are beginning to appear in the cost of goods sold, as reflected in the latest CPI report,” Eley commented.
The state’s franchise and excise tax, even though 52 percent over budget, comes in second for revenue surplus with $346 million for April and $765 million for the fiscal year.
With regard to the state’s corporate tax, Eley said that “revenues greatly outperformed budgeted expectations as well, with many local companies experiencing a growth in earnings despite difficult circumstances.”
For the month of April, the state’s inheritance and estate, tobacco, beer, motor vehicle registration, motor vehicle title, business, privilege, gross receipts and alcoholic beverage taxes contributed $32.6 million toward the state’s surplus.
Meanwhile, income tax receipts were off from the budgeted estimates by more than $58 million or 57 percent for the month of April.
Eley reminded that the lower than budgeted income tax collections was due to a filing extension that pushed the tax deadline into May.
The state’s mixed drink, TVA payments in lieu of taxes, severance and coin-operated museum taxes were off by a combined $3.5 million.
More concerning is the state’s gasoline and motor fuel revenues, which were $2.5 million less than the budgeted estimate for April and are down $18.8 million for the year. Fuel tax revenues for the month were even down three-quarters of a percent compared to pandemic-impacted April 2020.
Year-to-date, the Highway Fund is off by almost a full percentage for the year and approaching six percent compared to last year at this time.
The state’s General Fund, however, is more than 21 percent ahead of budgeted estimates for the year and 18 percent ahead of April 2020.
The tables from the Department of Finance and Administration detailing the revenue collections for April and the fiscal year to date can be viewed here.
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Laura Baigert is a senior reporter at The Tennessee Star.