Commissioner of Finance and Administration Butch Eley announced Monday that the Tennessee’s tax revenues exceeded budgeted estimates for the month of March by $62.1 million, despite the anticipated impact of the coronavirus.
Eley was named to the new post by Governor Bill Lee on April 15, while also serving as the Chief Operating Officer for the state. Prior to joining Governor Lee’s administration, he was a founder and CEO of Infrastructure Corporation of America, an infrastructure asset maintenance management company and a partner at the Ingram Group.
Eley replaced Stuart McWhorter as Commissioner of Finance and Administration, when McWhorter was appointed by Governor Lee as Lead of the COVID-19 Unified Command Group.
The tax revenues for March at $1.2 billion was $71.3 million more than the state collected in March 2019.
Anticipating the response to the news, Eley said, “Tennessee tax revenues exceeded estimates for the month of March, which will likely surprise some, given the current economy.”
Eley explained, “This monthly report clearly illustrates the inherent lag between reported tax receipts and that of actual economic activity, or lack thereof, which many Tennesseans are facing today.”
Eley referred to the sales tax as an example, saying those tax collections for March represent February consumer activity, which was prior to the stay-at-home orders issued late in March.
Sales tax revenues were $5.9 million – or less than one percent – more than the estimated $707 million for March and $237.4 million more than the eight-month estimate.
Franchise and excise tax revenues accounted for more than half the surplus tax collections in March at $35.4 million against the estimate of $35.4 million, which is 17 percent ahead of the monthly estimate.
Year-to-date, franchise and excise tax collections are $237.4 million more than the budgeted estimates.
Other tax revenues that exceeded the budgeted estimates:
Gas and motor fuel tax – $5 million more than the March budgeted estimate of $84.1 million and $39 million ahead for eight months
Tobacco tax – $5.4 million more than the March budgeted estimate of $19.4 million and $4.5 million ahead for eight months
Privilege tax – $7.1 million more than the budgeted estimate of $21 million and $41.6 million ahead for eight months
Business tax – $1.5 million more than the budgeted estimate of $15 million and $9.4 million ahead for eight months
Hall income tax – $1.9 million more than the budgeted estimate of $5.3 million and $6.5 million ahead for eight months
For the month of March, motor vehicle registration revenues were off by $1.3 million against the estimated $33 million, but remain ahead by $9.3 million for the year.
In total, year-to-date revenues for the eight-month period are $605.7 million more than the budgeted estimates.
The excess revenues puts the General Fund ahead of the budget by $486.7 million and the four other funds combined ahead by $119 million.
In November 2019, the State Funding Board adopted recurring growth ranges for all taxes of 3.1 to 3.6 percent for the current 2019-2020 fiscal year, which ends June 30.
For the upcoming 2020-2021 fiscal year beginning July 1, the Tennessee General Assembly passed a budget on March 19 that used the growth ranges, but included a $153.8 million reduction through an administration amendment in an effort to recognize the economic impact from the COVID-19 pandemic.
Included in the General Assembly’s passage of the appropriations act, Public Chapter No. 651, an additional $396.1 million in total revenue was recognized in the current fiscal year.
Eley forecast that the effect to the state’s revenues from the coronavirus pandemic will be forthcoming, “The eventual impacts of COVID-19 on tax revenues are unavoidable and will begin to appear in the coming months. We will closely monitor our tax receipts during this time and remain committed to balancing the state’s budget in a responsible manner during this extraordinary national economic downturn.”
Governor Bill Lee announced Monday that he will not be renewing the stay-at-home order that is set to expire on April 30.
State revenue tables for March and fiscal year 2019-2020 year to date can be viewed here.
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Laura Baigert is a senior reporter at The Tennessee Star.
