Tennessee May revenues grow month-over-month, still $29.5M below estimates
Tennessee revenues for May totaled more than the state collected in May 2022 but less than the budgeted estimates.
Finance and Administration Commissioner Jim Bryson reported that May tax revenues were $1.645 billion, which is $52.4 million more than May of last year, but $29.5 million less than the budgeted estimate. The total growth rate for the month was 3.29%.
"Total tax revenues in May showed strong growth compared to the same time last year," said Bryson. "Sales tax collections, which reflect taxable sales activity in April, were lower than original estimates but still increased significantly from May 2023. Privilege tax receipts were solid, driven by gains in realty transfer and mortgage tax activity. However, we observed notable declines in motor fuel tax receipts and tobacco taxes, which impacted the overall growth for the month.
Year-to-date, we are significantly below our original general fund budget estimate with two months remaining in the current fiscal year. However, with the support of the general assembly, we passed a budget that reduced our current year's general fund estimate and reset our recurring growth rate to zero percent year-over-year. As a result, we are on track to meet our revised estimated growth rates over the final two months of the fiscal year. In the meantime, we will continue to closely monitor tax collections and economic conditions to ensure fiscal stability."
On an accrual basis, May is the tenth month in the 2023-2024 fiscal year.
General fund revenues were $32.6 million less than the budgeted estimate, while the four other funds that share in state tax revenues were $3.1 million more than the estimates.
Sales tax revenues were $18.4 million less than the estimate for May but were 3.36% more than May 2023. For ten months, revenues are $124.1 million less than estimated. The year-to-date growth rate is 1.64%.
Franchise and excise tax revenues combined were $11 million less than the budgeted estimate in May, but the growth rate compared to May 2023 was 0.96%. For ten months, revenues are $313.6 million less than the estimate and the year-to-date growth rate is negative 7.02%.
Gasoline and motor fuel revenues for May decreased by 5.95% compared to May 2023, but they were $1.3 million more than the budgeted estimate of $105.5 million. For ten months, revenues are more than estimates by $6.2 million.
Motor vehicle registration revenues were $5.3 million more than the May estimate, and on a year-to-date basis, revenues are $4.8 million more than the estimate.
Tobacco tax revenues were $6.5 million less than the May budgeted estimate of $20.8 million. For ten months, they are $20.6 million less than the budgeted estimate.
Privilege tax revenues were $0.3 million more than the May estimate and increased 35.17% from May 2023. On a year-to-date basis, August through May, revenues are $112.8 million less than the estimate.
Business tax revenues were $1.6 million more than the May estimate. For ten months, revenues are $26.8 million more than the budgeted estimate.
Mixed drink, or Liquor-by-the-drink, taxes were $1.4 million less than the May estimate. For ten months, revenues are $1.6 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 $523.7 million less than the budgeted estimate. The general fund was $533.5 million less than the budgeted estimate, and the four other funds were $9.8 million more than estimated.
The budgeted revenue estimates for 2023-2024 are based upon the State Funding Board’s consensus recommendation from Nov. 28, 2022, and adopted by the first session of the 113th General Assembly in April 2023. Also incorporated in the estimates are any changes in revenue enacted during the 2023 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 Nov. 6, 2023, the State Funding Board met again to hear updated revenue projections from various state economists. Following this meeting, on November 29, 2023, the board decided to adopt revised revenue growth ranges for the current fiscal year. The recurring growth ranges adopted include a low of negative 0.69% to a high of negative 0.19% for total taxes and a recurring range low of negative 0.50% to a high of 0.00% for general fund taxes.
On April 18, 2024, in the second session of the 113th General Assembly, the Legislature passed House Bill 2973/Senate Bill 2942, which included the Funding Board’s revised revenue ranges for the current year. Upon passage, revenue estimates were revised lowered by $798.4 million for total funds and $718.8 million for general fund revenue. The appropriations bill, Public Chapter 966, was signed by Governor Lee on May 15, 2024.