NASHVILLE, Tenn. – Tennessee Department of Finance and Administration Commissioner Butch Eley today announced that revenues for April were less than the monthly revenues from the previous year. Overall state revenues for April were $1.3 billion, which is a negative growth rate of 39.75 percent compared to last year and $693.8 million less than the state budgeted.
“The signs of economic downturn due to the COVID-19 pandemic have begun to appear in Tennessee’s April tax receipts,” Eley said. “April sales tax revenues, reflecting March taxable sales activity, were weakened as the state began to withdraw from its usual patterns of consumer spending by mid-month. Franchise and excise tax receipts, along with Hall income and business taxes are also notably reduced due to filing extensions that will allow individuals and businesses to report their taxable activity later in the year.
“It has been 10 years since an economic downturn has impacted state revenues. The state’s large monthly revenue surpluses built up throughout the beginning of the year will now be tested as the pandemic’s impact begins to erase those gains. Yet, we remain committed to keeping the state's budget in balance despite the current challenges.”
The Tennessee Department of Revenue extended the due date for certain taxes on April 6, 2020 and can be found on their website at https://www.tn.gov/revenue/news/2020/3/31/tennessee-extends-certain-tax-deadlines-due-to-covid-19.html
On an accrual basis, April is the ninth month in the 2019-2020 fiscal year.
General fund revenues were less than budgeted estimates by $650.9 million, while the four other funds that share in state tax revenues were $42.9 million less than the estimates.
Sales tax revenues were $61.2 million less than the estimate for April and they were 6.01 percent less than April 2019. For nine months, revenues are $182.4 million higher than estimated. The year-to-date growth rate for nine months is 4.83 percent.
Franchise and excise tax revenues combined were $486.6 million lower than the budgeted estimate in April, and the growth rate compared to April 2019 was negative 70.61 percent. For nine months, revenues are $249.2 million lower than the estimate and the year-to-date growth rate is negative 16.50 percent.
Gasoline and motor fuel revenues for April decreased by 1.4 percent compared to April 2019 and they were $5.6 million less than the budgeted estimate of $108.7 million. For nine months revenues are more than estimated by $33.4 million.
Motor vehicle registration revenues were $10.8 million less than the April estimate, and on a year-to-date basis they are $1.6 million less than estimates.
Tobacco tax revenues were $3.2 million less than the April budgeted estimate of $18.8 million. For nine months, they are $1.3 million more than the budgeted estimate.
Mixed drink taxes were $7.4 million less than the budgeted estimate of $12.5 million.
Hall income tax revenues for April were $62 million less than the budgeted estimate. For nine months, revenues are $55.5 million less than the budgeted estimate.
Privilege tax revenues were $7.2 million less than the April estimate, and on a year-to-date basis, August through April, revenues are $34.4 million more than the estimate.
Business tax revenues were $50.4 million less than the April estimate. For nine months, revenues are $41 million less than the budgeted estimate.
All other tax revenues exceeded estimates by a net of $0.6 million.
Year-to-date revenues, August through April, are $88.1 million less than the budgeted estimate. The growth rate for nine months is negative 0.89 percent. General fund revenues are $164.2 million less than the budgeted estimate and the four other funds are $76.1 million more than estimated.
The budgeted revenue estimates for 2019-2020 are based on the State Funding Board’s consensus recommendation of November 26, 2018, and adopted by the second session of the 111th General Assembly in April 2019. Also incorporated in the estimates are any changes in revenue enacted during the 2019 session of the General Assembly. These estimates are available on the state’s website at https://www.tn.gov/content/tn/finance/fa/fa-budget-information/fa-budget-rev.html.
On November 19, 2019, the State Funding Board met to hear updated revenue projections from various state economists. Following this meeting, on November 26, 2019, the board decided to adopt revised revenue growth ranges for the current fiscal year. The recurring growth ranges adopted include a low of 3.10 percent to a high of 3.60 percent for total taxes and a recurring range low of 3.20 percent to a high of 3.75 percent for general fund taxes.
On March 19, 2020 in the second session of the 111th General Assembly, the Legislature passed the 2019-2020 budget, which included the Funding Board’s current year revised ranges and also the administration’s amendment to the proposed budget. The administration’s amendment, in an effort to recognize the economic impact from the COVID-19 pandemic, included a reduction of $153.8 million of previously projected revenue to acknowledge potential shortfalls. The Governor signed the budget bill on April 2, 2020.
With the passage of the appropriations act, Public Chapter 651, the General Assembly recognized in the current fiscal year an additional $396.1 million in total revenue and a corresponding increase in general fund revenue in the amount of $345.9 million.