Tennessee Department of Finance and Administration Commissioner Butch Eley today announced that revenues for May were $1.6 billion, which is $327.4 million more than the budgeted monthly revenue estimate. State tax revenues were $41.8 million more than May 2021 and the overall growth rate was 2.66 percent.
“May tax revenues reflect an increase compared to this time last year, although monthly growth was much lower for May compared to all other months that have reported year-to-date,” Eley said. “Sales tax revenue receipts continue to remain elevated, but corporate taxes held nearly flat when compared to May of last year. Monthly growth was also limited by the full phase out of the Hall income tax, which resulted in a decline of $39.7 million, and a shift of approximately $20 million in professional privilege tax payments that will be recaptured next month.
“With two months remaining in the fiscal year, we will continue to monitor revenue and expenditures to keep Tennessee fiscally strong, especially as we see continued sharp increases in the consumer-price index that will likely have future economic effects.”
On an accrual basis, May is the tenth month in the 2021-2022 fiscal year.
General fund revenues were more than the budgeted estimates in the amount of $303.4 million and the four other funds that share in state tax revenues were $24 million more than the estimates.
Sales tax revenues were $272.2 million more than the estimate for May and 9.31 percent more than May 2021. For ten months, revenues are $2 billion higher than estimated. The August through May growth rate is 15.89 percent.
Franchise and excise tax revenues combined were $33.3 million greater than the budgeted estimate in May, and the growth rate compared to May 2021 was negative 0.18 percent. For ten months, revenues are $1.4 billion more than the estimate and the year-to-date growth rate is 34.05 percent.
Gasoline and motor fuel revenues for May decreased by 6.79 percent compared to May 2021, but and they were $0.3 million more than the budgeted estimate of $100.8 million. For ten months, revenues are more than estimates by $46.5 million.
Motor vehicle registration revenues were $2.8 million more than the May estimate, and on a year-to-date basis, revenues are $17.7 million more than the estimate.
Tobacco tax revenues were $0.2 million less than the May budgeted estimate of $20.6 million. For ten months, they are $1.7 million less than the budgeted estimate.
Privilege tax revenues were $7.3 million more than the May estimate but decreased 14.67 percent from May 2021. On a year-to-date basis, August through May, revenues are $146.2 million more than the estimate.
Business tax revenues were $4.6 million more than the May estimate. For ten months, revenues are $41.6 million more than the budgeted estimate.
Mixed drink, or Liquor-by-the-drink, taxes were $7.8 million more than the May estimate. For ten months, revenues are $46.3 million more than the budgeted estimate.
All other tax revenues were less than estimates by a net of $0.7 million.
Year-to-date revenues, for ten months, are $3.7 billion more than the budgeted estimate. The general fund recorded $3.5 billion more than the budgeted estimate and the four other funds were $209.1 million more than estimated.
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. Also incorporated in the estimates are any changes in revenue enacted during the 2021 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 17, 2021, the State Funding Board met again to hear updated revenue projections from various state economists. Following this meeting, on November 23, 2021, the board decided to adopt revised revenue growth ranges for the current fiscal year. The recurring growth ranges adopted include a low of 6.80 percent to a high of 7.45 percent for total taxes and a recurring range low of 7.75 percent to a high of 8.50 percent for general fund taxes.
On April 21, 2022, in the second session of the 112th General Assembly, the Legislature passed the 2022-2023 budget, which included the Funding Board’s revised revenue ranges for the current year. Upon passage, an additional $2,936.5 million in total funds and $2,870.6 million in general fund revenue were added to this year’s original budgeted estimates. Public Chapter 1130, known as the appropriations bill, was signed by Governor Lee on June 1, 2022.