State July revenues $303.6M above estimates

Tennessee Department of Finance and Administration Commissioner Jim Bryson announced that Tennessee July revenues were $1.6 billion, which is $303.6 million more than the budgeted estimate and $138.3 million more than the state received in July 2021. The growth rate for July was 9.43%.

“Total tax revenue for the month of July reflects unusual growth compared to this time last year,” Bryson said. “Sales and use tax receipts, reflecting June taxable sales activity, outperformed expectations and were the largest contributor to our monthly year-over-year comparison. State corporate tax revenues, or franchise and excise taxes, together with realty transfer and realty mortgage tax collections, included in our privilege tax revenues, also greatly exceeded estimates. All other revenues combined posted moderate gains compared to July revenues one year ago.

“As the state prepares to close fiscal year 2021-2022, it should be noted that total annual tax growth at 16.95% was the highest since fiscal year 1992-1993, when growth was near 19% after several subsequent tax increases. Measured against last year’s collections, total state tax revenues grew by just over $3 billion. Furthermore, when comparing our total tax revenue collections against our revised revenue estimate total growth was $1.7 billion and general fund revenues outperformed the revised budget by $1.5 billion.

“Despite this unusual growth, future growth remains a concern. Thus, we will continue to monitor national and global economic indicators to manage our spending and revenue expectations appropriately.”

On an accrual basis, July is the final month in the 2021-2022 fiscal year.  Final reported revenues will be subject to accrual accounting adjustments that may increase or decrease the recorded cash amounts on an audited basis.

General fund revenues were more than the budgeted estimates in the amount of $280 million and the four other funds that share in state tax revenues were $23.6 million more than the estimates.

Sales tax revenues were $244.7 million more than the estimate for July and 11.43% more than July 2021. For the year, revenues are $2.5 billion higher than estimated with an annual growth rate of 15.59%.

Franchise and excise tax revenues combined were $26.2 million greater than the budgeted estimate in July, and the growth rate compared to July 2021 was 11.18%. For the year, revenues are $1.7 billion more than the estimate and the year-to-date growth rate is 31.84%.

Gasoline and motor fuel revenues for July decreased by 3.75% compared to July 2021, but they were $3.1 million more than the budgeted estimate of $107 million. For the year, revenues exceeded estimates by $53.8 million.

Motor vehicle registration revenues were $2.1 million more than the July estimate, and on a year-to-date basis, revenues are $22.7 million more than the estimate.

Tobacco tax revenues were $2.9 million less than the July budgeted estimate of $20.4 million. For the year, they are $7.7 million less than the budgeted estimate.

Privilege tax revenues were $22.4 million more than the July estimate, and on a year-to-date basis, August through July, revenues are $196.2 million more than the estimate.

Business tax revenues were $1 million more than the July estimate of $11.9 million. For the year, revenues are $45.2 million more than the budgeted estimate.

Mixed drink, or Liquor-by-the-drink, taxes were $5.9 million more than the July estimate.  For the year, revenues are $60 million more than the budgeted estimate.

All other tax revenues were more than estimates by a net of $1.1 million.

Year-to-date revenues, for eleven months, are $4.6 billion more than the budgeted estimate. The general fund recorded $4.3 billion more than the budgeted estimate and the four other funds were $261.8 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% to a high of 7.45% for total taxes and a recurring range low of 7.75% to a high of 8.50% 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 billion in total funds and $2.870 billion 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.