NASHVILLE – Tennessee reported May tax revenues totaling $1.645 billion, representing an increase of $52.4 million over May 2022. However, the figure fell short of the budgeted estimate by $29.5 million, according to Finance and Administration Commissioner Jim Bryson. The overall growth rate for the month was 3.29 percent.
“Total tax revenues in May showed strong growth compared to the same time last year,” Bryson noted. Despite this, sales tax collections, which reflect taxable sales activity in April, were lower than initial projections but still showed significant growth from May 2023. Gains in realty transfer and mortgage tax activity bolstered privilege tax receipts. However, declines in motor fuel tax receipts and tobacco taxes tempered overall growth.
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Year-to-date, state revenues remain significantly below the original general fund budget estimate with two months left in the current fiscal year. Adjustments made in the budget, supported by the general assembly, reduced the current year’s general fund estimate and reset the recurring growth rate to zero percent year-over-year. This adjustment puts the state on track to meet revised growth rates for the final two months of the fiscal year. The state will continue to monitor tax collections and economic conditions to ensure fiscal stability.
On an accrual basis, May marks the tenth month in the 2023-2024 fiscal year. General fund revenues were $32.6 million below the budgeted estimate, while the four other funds that share in state tax revenues exceeded estimates by $3.1 million.
Specific revenue details include:
– Sales tax revenues were $18.4 million below the May estimate but increased by 3.36 percent compared to May 2023. For ten months, revenues are $124.1 million less than estimated, with a year-to-date growth rate of 1.64 percent.
– Franchise and excise tax revenues combined were $11 million below the budgeted estimate in May, growing by 0.96 percent compared to May 2023. For ten months, revenues are $313.6 million short of the estimate, with a year-to-date growth rate of negative 7.02 percent.
– Gasoline and motor fuel revenues decreased by 5.95 percent compared to May 2023 but were $1.3 million above the budgeted estimate of $105.5 million. Over ten months, revenues exceeded estimates by $6.2 million.
– Motor vehicle registration revenues were $5.3 million above the May estimate, with year-to-date revenues $4.8 million over the estimate.
– Tobacco tax revenues were $6.5 million below the May budgeted estimate of $20.8 million, totaling $20.6 million less than the budgeted estimate over ten months.
– Privilege tax revenues exceeded the May estimate by $0.3 million, showing a 35.17 percent increase from May 2023. Year-to-date, revenues are $112.8 million below the estimate.
– Business tax revenues were $1.6 million above the May estimate, totaling $26.8 million more than the budgeted estimate over ten months.
– Mixed drink, or Liquor-by-the-drink, taxes were $1.4 million below the May estimate, with year-to-date revenues $1.6 million more than the budgeted estimate.
– All other tax revenues were below estimates by a net of $0.7 million.
Year-to-date revenues for ten months are $523.7 million below the budgeted estimate. The general fund is $533.5 million below the budgeted estimate, while the four other funds are $9.8 million more than estimated.
The budgeted revenue estimates for 2023-2024 are based on the State Funding Board’s consensus recommendation from November 28, 2022, and were adopted by the first session of the 113th General Assembly in April 2023. These estimates, including any changes enacted during the 2023 General Assembly session, 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 6, 2023, the State Funding Board met to hear updated revenue projections from various state economists. On November 29, 2023, the board revised revenue growth ranges for the current fiscal year, adopting a low range of negative 0.69 percent to a high of negative 0.19 percent for total taxes, and a range of negative 0.50 percent to 0.00 percent for general fund taxes.
In the second session of the 113th General Assembly on April 18, 2024, House Bill 2973/Senate Bill 2942, which included the Funding Board’s revised revenue ranges, was passed. Upon passage, revenue estimates were lowered by $798.4 million for total funds and $718.8 million for general fund revenue. Governor Lee signed the appropriations bill, Public Chapter 966, on May 15, 2024.
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