State sales tax collections drop $106M in first full month of coronavirus

Tennessee’s sales tax collections decreased by $106 million in the first full month of the coronavirus pandemic compared with the same month last year, a $13% drop.

General fund revenues missed projections by $144 million in May and have fallen short of expectations by $308 million through the first 10 months of the budget year.

Here’s the full release from the Department of Finance and Administration:

NASHVILLE – Tennessee Department of Finance and Administration Commissioner Butch Eley today announced that revenues for May were $981.9 million, which is $197.3 million less than the budgeted monthly revenue estimate. State tax revenues were $184.7 million less than May 2019 and the overall revenue for the month represented a negative growth rate of 15.83 percent.

“May sales tax collections represent consumer spending that occurred during April, when Tennesseans were staying at home and many businesses were closed in response to the COVID-19 pandemic,” Eley said. “While sales of autos, apparel, furniture and restaurants dropped extensively, building materials and food stores sales experienced considerable growth. The state also realized large drops in gasoline tax receipts, motor vehicle title and registration taxes and mixed drink revenues.

“We responded quickly to develop plans that would mitigate revenue shortfalls at the outset of the pandemic and now the work begins to bring spending in line with what economists predict we will experience. We are encouraged about the improving employment numbers in Tennessee and while we hope for solid recovery trends, we are preparing for a longer and slower growth period, managing our budget conservatively as we work to help all of Tennessee recover from this unprecedented economy.”

As previously noted last month, the Tennessee Department of Revenue extended the due date for certain taxes on April 6, 2020 and the extensions can be found on their website at https://www.tn.gov/revenue/news/2020/3/31/tennessee-extends-certain-tax-deadlines-due-to-covid-19.html.

On an accrual basis, May is the tenth month in the 2019-2020 fiscal year.

General fund revenues were less than the budgeted estimates in the amount of $144 million and the four other funds that share in state tax revenues were $53.3 million less than the estimates.

Sales tax revenues were $112.3 million less than the estimate for May and were 13.36 percent less than May 2019. For ten months, revenues are $70.1 million higher than estimated. The year-to-date growth rate is 2.97 percent.

Franchise and excise tax revenues combined were $2.2 million lower than the budgeted estimate in May, and the growth rate compared to May 2019 was negative 10.25 percent. For ten months, revenues are $251.4 million less than the estimate and the year-to-date growth rate is negative 16.31 percent.

Gasoline and motor fuel revenues for May decreased by 28.41 percent compared to May 2019, and they were $33 million less than the budgeted estimate of $102.7 million. For ten months, revenues have exceeded estimates by $0.4 million.

Tobacco tax revenues were $1.8 million less than the May budgeted estimate of $21.1 million. For ten months, they are $0.4 million less than the budgeted estimate.

Hall income tax revenues for May were $2.5 million more than the budgeted estimate. For ten months, revenues are $52.9 million less than the budgeted estimate.

Privilege tax revenues were $29.2 million less than the May estimate, and on a year-to-date basis, August through May, revenues are $5.2 million more than the estimate.

Business tax revenues were $1.4 million less than the May estimate. For ten months, revenues are $42.4 million less than the budgeted estimate.

Motor vehicle registration revenues were $9.3 million less than the May estimate, and on a year-to-date basis, revenues are $10.9 million less than the estimate.

Mixed drink, or Liquor-by-the-drink, taxes were $10.7 million less than the May estimate as on-premise drinking establishments were closed.  For ten months, revenues are $8.7 million less than the budgeted estimate.

All other tax revenues exceeded estimates by a net of $0.1 million.

Year-to-date revenues for ten months were $285.4 million less than the budgeted estimate. The general fund recorded $308.2 million less than the budgeted estimate and the four other funds were $22.8 million more than estimated.

The budgeted revenue estimates for 2019-2020 are based on the State Funding Board’s consensus recommendation of November 26, 2018, and adopted by the second session of the 111th General Assembly in April 2019. Also incorporated in the estimates are any changes in revenue enacted during the 2019 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 19, 2019, the State Funding Board met to hear updated revenue projections from various state economists. Following this meeting, on November 26, 2019, the board decided to adopt revised revenue growth ranges for the current fiscal year. The recurring growth ranges adopted include a low of 3.10 percent to a high of 3.60 percent for total taxes and a recurring range low of 3.20 percent to a high of 3.75 percent for general fund taxes.

On March 19, 2020 in the second session of the 111th General Assembly, the Legislature passed the 2019-2020 budget, which included the Funding Board’s current year revised ranges and also the administration’s amendment to the proposed budget. The administration’s amendment, in an effort to recognize the economic impact from the COVID-19 pandemic, included a reduction of $153.8 million of previously projected revenue to acknowledge potential shortfalls. The governor signed the appropriations bill on April 2, 2020.

With the passage of the appropriations act, Public Chapter 651, the General Assembly recognized in the current fiscal year an additional $396.1 million in total revenue and a corresponding increase in general fund revenue in the amount of $345.9 million.

19 Responses to State sales tax collections drop $106M in first full month of coronavirus

  • Avatar
    LeeAnn C. says:

    And NOW, the World Health Organization tells us that the coronavirus is not readily transmitted by asymptomatic individuals. All those executive orders and appointed committees ordering the shut down of businesses and livelihoods were based on faulty assumptions and faulty models, NOT data. Governor Lee, the last self-proclaimed conservative candidate fooled the entire state. Never waste your vote again on anyone that has not demonstrated what their core values are by ACTION! Words alone just cannot be trusted!

    The 1.5 billion ‘rainy day fund’ totally wiped out and now our state faces a deficit. While it’s a good opportunity to reduce some waste in state government, the governor bemoans his statute mandated pay increase.

    • Avatar
      Captain Haggerty says:

      But your hero Haggerty told us the WHO was in it with the Chinese to lie to us about the virus. Who are we supposed to believe?

      • Avatar
        LeeAnn C. says:

        Not Governor Lee, Mr. Data Driven decisions, who appointed himself, bureaucrats and unelected committees to govern and SPEND our state into debt – simultaneously ruining lives of Tennessee residents. Governor Kristi Noem demonstrated the appropriate response and exercised the freedoms provided by President Trump for governors to determine their own state’s best path forward. NEVER AGAIN elect a self-proclaimed ‘conservative’ that has NOTHING to show for it! We’ll have to work for decades to fix the financial harm done, but at least we should learn our lesson about trusting anyone based on empty promises and proclamations.

    • Avatar
      Jonathan Swift says:

      More “hindsight is 20/20” ranting and pure fabrications. Where was there any mention of wiping out the rainy day fund?

    • That means vote often against Hagerty

    • Avatar
      Eddie White says:

      The rainy day fund will not be wiped out and the state will not end the year with a deficit.

    • Avatar
      MARLE says:

      Most of the US faulty information and models came from our own cdc and were brought to us near-daily by Faucit and Birx. You have TRUMP to fault for all of this. Lee was just following White House sponsored directives.

  • Avatar
    James White says:

    Yes the legislature FIRST thing Jan 2021, needs to Severely Reduce the Power of the Executive branch and the Governor specifically and Never allow them to put any restrictions on PRIVATE Businesses and The People.

    • Avatar
      LeeAnn C. says:

      AMEN! And my legislators have assured me that this will be their first priority.

      • Avatar
        Gail McPeak says:

        “My” legislators? I thought legislators served all residents? Maybe that is the root of some of our problems as a nation, both with the elected officials and their constituents.

        • Avatar
          LeeAnn C. says:

          ‘My’ legislators are those that represent ‘my’ area. We are divided into districts for electing ‘our’ representatives. I do communicate with legislators in other districts, however, I find the ones in ‘my’ district are most attentive. Many legislative offices filter out communications from non-constituents. If you share concerns, I suggest you contact ‘your’ legislators.

      • They will not have the guts to go up against a governor. Never have

  • Avatar
    Ken says:

    Before everyone rides off on their high horse, against Gov. Lee, please watch the clarifying comments that were shown today on “Morning Joe”, on MSNBC. And I know it’s a liberal network but Dr. Ezekiel Emmanuel is interviewed and points out the faulty way that the WHO offered up that statement. Bottom line: asymptommatics CAN transmit the coronavirus, WHO engaged in gobbledygook in their pronouncement. Watch the interview with Dr. Emmanuel. Gov Lee is doing the best he can, trying to sort out best directives to issue, in the muck and drama of the Trump Administration’s reckless focus only upon forwarding another four years of its clown show upon the American people.

  • Avatar
    Eddie White says:

    I would not give the time of day to Morning Joe and their hate spewed rhetoric toward President Trump. I do agree that Bill Lee was making the best decisions based on the information being given to him.

    • Avatar
      Donna Locke says:

      I hope the state gets our money back on those sock masks. Glad I didn’t get one. Some agency came by and gave one to my elderly mother, and she forgot where she put it, so I guess she’ll come across it someday and poison herself.

      Bill Lee has made mostly very bad and wasteful decisions about a number of things. I don’t fault him, though, for advised actions to prevent spread of the virus, given the alarming info being thrown at us.

      My granddaughter is playing the ukulele in the next room. This is a cheering distraction from Tennessee’s currently disastrous policies. We will ake requests.

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