Tennessee tax revenues for the month of March exceeded budgeted estimates by $348.8 million, putting the fiscal year surplus at $2.5 billion, reported Department of Finance and Administration Commissioner Butch Eley in a statement Thursday.
March tax revenues totaling $1.6 billion were $286.8 million or 22.78 percent higher than the state received in March 2021.
Year-to-date, the state has received nearly 25 percent more in tax revenues than budgeted. At the same point last fiscal year, the surplus of $2 billion was 18.6 percent ahead of the budgeted estimates.
March is the eighth month of the 2021-2022 fiscal year on an accrual basis.
Referring to the overall tax growth over the previous year as “remarkable,” Eley said, “Of the $286.8 million in additional tax revenue, nearly 70 percent is attributed to growth in sales tax collections, based on February sales tax activity in all categories of industry.”
Eley went on to detail the categories which saw the highest growth in sales tax revenues.
“Specifically, building materials grew 33.99 percent, general merchandise retailers saw 15.22 percent growth, food stores grew 11.43 percent, auto dealers and service stations saw a 19.50 percent increase in sales taxes, apparel and accessory retailers grew 36.58 percent, home furnishing retailers grew 23.51 percent, restaurants and bars serving food grew 33.41 percent and sales tax receipts on taxable services grew 45.70 percent.”
Actual sales tax revenues for March of $961 million were more than 25 percent above budget of $765 million.
In addition to the sales tax revenues, Eley said, “we saw notable growth in franchise and excise taxes, privilege taxes and motor vehicle registration fee receipts in March.”
The state’s corporate or franchise and excise tax, which is the state’s second-highest source of tax revenues after sales tax, was budgeted at $206 million for the month. Actual receipts were $321 million or more than 55 percent over budget.
The privilege tax, budgeted at $25 million had receipts of $38 million or 53 percent over budgeted estimates.
Motor vehicle registration fees, budgeted at $43 million, saw actual receipts of $43 million or 32 percent ahead of the budget.
With the exception of the gas tax and TVA payments in lieu of tax payments, which were short of budgeted estimates by a combined $3.2 million, all other tax receipts exceeded budgeted estimates.
The income, petroleum, tobacco, beer, motor vehicle title, mixed drink, business, gross receipts, alcoholic beverage, motor vehicle fuel, severance and coin-operated amusement taxes combined for revenues $17.7 million more than the $82 that was budgeted.
For the year, only the tobacco, motor vehicle title and gross receipt taxes as well as the TVA payments in lieu of taxes are below the budgeted estimates by a combined total of $9.4 million.
Year-to-date revenues of all four of the state’s major funds – General, Highway, Sinking and City & County – have exceeded the budgeted estimates.
“At this time, the large tax growth we have experienced in these first eight months of the fiscal year puts the state in a good position to meet and exceed budgeted revenue estimates within the next few months. Nevertheless, we will continue to closely monitor our monthly receipts, being mindful we are in an extremely inflated economy and a large number of uncertainties still exist,” Eley concluded.
The budgeted revenue estimates for 2021-2022 are based on the State Funding Board’s consensus recommendation of November 24, 2020 and adopted by the first session of the 112th General Assembly in April 2021, and include any changes in revenue enacted during the 2021 session of the General Assembly.
The tax revenue and fund tables for the month and fiscal year can be viewed here.
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Laura Baigert is a senior reporter at The Star News Network, where she covers stories for The Tennessee Star and The Georgia Star News.