NASHVILLE, Tenn. – Tennessee Department of Finance and Administration Commissioner Butch Eley today announced that Tennessee tax revenues exceeded budgeted estimates in February. February revenues totaled $1.13 billion, which is $112.7 million more than the state received in February 2020 and $190.9 million more than the budgeted estimate. The growth rate for February was 11.06 percent.
“The two largest contributors to the state’s tax base, sales and corporate tax revenues, delivered extraordinary growth for the month of February,” Eley said. “Sales tax revenue growth, representing January consumer sales tax activity, occurred in most all segments of the state’s economy, except for the restaurant and bar industry. Revenues from online sales taxes also boosted our monthly growth rate with approximately $44.5 million in growth attributed to remote sales and marketplace facilitator laws. To date, online sales tax revenues have accounted for about 66.4 percent of all sales tax growth to the state.
“On a year-to-date basis, state revenue collections continue to be well positioned to finish the fiscal year ahead of our budgeted estimates. Nevertheless, we must closely monitor the months of April and June as they are large corporate tax filing months and can be quite volatile. Further, it is important to note that federal aid related to COVID-19 is still flowing into Tennessee and will continue to do so in the near-term. Future economic projections will be difficult to achieve until that federal aid ceases, which means we must remain cautious.”
On an accrual basis, February is the seventh month in the 2020-2021 fiscal year.
General fund revenues exceeded the budgeted estimates in the amount of $154.2 million while the four other funds that share in state tax revenues were $36.7 million less than the estimates.
Sales tax revenues were $167.1 million more than the estimate for February and 15.67 percent more than February 2020. For seven months, revenues are $900.4 million higher than estimated. The year-to-date growth rate for seven months was 7.11 percent.
Franchise and excise tax revenues combined were $16.1 million more than the budgeted estimate in February and the growth rate compared to February 2020 was 7.06 percent. For seven months, revenues are $350 million more than the estimate and the year-to-date growth rate is 4.36 percent.
Gasoline and motor fuel revenues for February decreased by 3.23 percent compared to February 2020. However, fuel taxes were $2.8 million more than the February budgeted estimate of $90.4 million. For seven months, revenues are less than estimates by $10.5 million.
Motor vehicle registration revenues were $5.7 million less than the February estimate, and on a year-to-date basis they are $6.8 million more than estimates.
Tobacco taxes were $2.3 million less than the February budgeted estimate of $18.1 million. For seven months, they are $7 million more than the budgeted estimate.
Privilege taxes were $11 million more than the February estimate, and on a year-to-date basis, August through February, revenues are $55.3 million more than the estimate.
Business taxes were $5.9 million more than the February estimate. For seven months, revenues are $20.8 million more than the budgeted estimate.
Hall income tax revenues for the month were $0.8 million less than the budgeted estimate. On a year-to-date basis, income tax revenues are $0.5 million less than the estimate.
Mixed drink, or liquor-by-the-drink, taxes were $1.7 million less than the February estimate, and on a year-to-date basis, revenues are 21.1 million less than the budgeted estimate.
All other tax receipts were less than estimates by a net of $1.5 million.
Year-to-date revenues for seven months were $1.3 billion more than the budgeted estimate. The general fund recorded $1.2 billion more than the budgeted estimates and the four other funds $72.5 million.
The budgeted revenue estimates for 2020-2021 are based on the State Funding Board’s consensus recommendation of November 26, 2019 and adopted by the second session of the 111th General Assembly in June 2020. Also incorporated in the estimates are any changes in revenue enacted during the 2020 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.