revenues

New edition alert: Lee order snubbed, GOP introduces fees to run, 3-judge panels named

Gov.-elect Bill Lee speaks to a Chamber of Commerce event in Memphis on Dec. 6, 2018. (Erik Schelzig, Tennessee Journal)

In this week’s print edition of The Tennessee Journal:

— Big school districts ignore Lee’s executive order for opting out of masks

— That’ll cost you: State GOP approves fee schedule for candidates, bona fide updates.

— Money matters: Tennessee ends budget year with $2.96B surplus in its general fund.

— A three-judge tour: Supreme Court names first three-judge panels, two headed by Lyle.

— Also: Lee gets the Trump endorsement, Harshbarger late on stock disclosures, Haslam and Sundquist as new radicals, and was Fiscus barking up the wrong tree with her muzzle complaints?

Access the your TNJ copy here or subscribe here.

Tennessee revenue collections obliterate estimates by $600M in April

The state Capitol on March 16, 2020. (Erik Schelzig, Tennessee Journal)

Tennessee’s general fund revenue collections were nearly $600 million above estimates in April, bringing the state’s surplus to $1.9 billion through the first nine months of the budget year.

Sales tax revenues beat projections by $285 million in April and were 32% higher than the same month last year. Collections reflect economic activity in the previous month.

Online sales tax collections represent 46.5% of all sales tax growth in the state since the beginning of the budget year.

Corporate franchise and excise taxes were $346 million more than expected in April, with a growth rate of 320% compared with last April.

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

Tennessee Department of Finance and Administration Commissioner Butch Eley today announced that revenues for April exceeded the monthly revenues from the same month last year, which was at the beginning of the pandemic’s impact in Tennessee. Overall state revenues for April were $2.5 billion, which is $1.3 billion more than April 2020, and $596.7 million more than the budgeted estimates. The growth rate for all taxes in April was 90.90 percent.

“It’s important to remember that March and April of 2020 were the only two months where the state experienced a negative growth rate for collections during the pandemic, so in an effort to make realistic analysis, we’ve looked at collections for April 2019,” Eley said. “When we compare April of this year to 2020, the growth is 90.90 percent but compared to April 2019, the April growth rate for all taxes is 15.01 percent.

“Sales tax collections continue to reflect strong consumer activity and increased inflationary pressures that are beginning to appear in the cost of goods sold, as reflected in the latest CPI report. State corporate tax revenues greatly outperformed budgeted expectations as well, with many local companies experiencing a growth in earnings despite difficult circumstances. We should also keep in mind that April income tax receipts were lower than budgeted estimates due to a filing extension that moves the tax deadline into next month.

“Prior year month-to-month tax receipt comparisons for this month and the remainder of the year will appear distorted as periods of economic stoppage from the pandemic and the movement of multiple tax filing dates affect reported growth rates.”

On an accrual basis, April is the ninth month in the 2020-2021 fiscal year.

General fund revenues exceeded budgeted estimates by $599.9 million, while the four other funds that share in state tax revenues were $3.2 million less than the estimates.

Sales tax revenues were $284.9 million more than the estimate for April, 40.20 percent more than April 2020, and 31.78% more than April 2019. April sales tax revenues reflect retail business activity that occurred in March. For nine months, revenues are $1.2 billion higher than estimated. The year-to-date growth rate for nine months is 10.60 percent. Remote sales and marketplace facilitator laws contributed $54.9 million to sales tax receipts in the month of April. For nine months, online sales tax revenues represent 46.5 percent of all sales tax growth to the state.

Franchise and excise tax revenues combined were $346 million higher than the budgeted estimate in April, and the growth rate compared to April 2020 was positive 319.30 percent. For nine months, revenues are $765 million more than the estimate and the year-to-date growth rate is 47.22 percent.

Gasoline and motor fuel revenues for April decreased by 0.75 percent compared to April 2020 and they were $2.4 million less than the budgeted estimate of $104.7 million. For nine months revenues are less than estimated by $18.8 million.

Motor vehicle registration revenues were $4.7 million more than the April estimate, and on a year-to-date basis they are $13.6 million more than estimates.

Tobacco tax revenues were $1.5 million more than the April budgeted estimate of $17.5 million. For nine months, they are $9.5 million less than the budgeted estimate.

Hall income tax revenues for April were $58.5 million less than the budgeted estimate. A filing extension was granted for income taxes moving the filing date from April 15, 2021 to May 17, 2021.  (See: https://www.tn.gov/content/dam/tn/revenue/documents/notices/general/gen2102.pdf)

Privilege tax revenues were $14.2 million more than the April estimate, and on a year-to-date basis, August through April, revenues are $72.4 million more than the estimate.

Business tax revenues were $7.9 million more than the April estimate. For nine months, revenues are $35 million more than the budgeted estimate.

Mixed drink, or liquor-by-the-drink, taxes were $1.2 million less than the April estimate, and on a year-to-date basis, revenues are $24.7 million less than the budgeted estimate.

All other taxes were less than budgeted estimates by a net of $0.4 million.

Year-to-date revenues, August through April, are $2 billion more than the budgeted estimate. The growth rate for eight months is 14.72 percent. General fund revenues are $1.9 billion more than the budgeted estimate and the four other funds are $66.2 million more than estimated.

The budgeted revenue estimates for 2020-2021 are based on the State Funding Board’s consensus recommendation of November 26, 2019 and adopted by the second session of the 111th General Assembly in June 2020. Also incorporated in the estimates are any changes in revenue enacted during the 2020 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.

General fund surplus hits $1.35B through first 8 months of budget year

The state Capitol on March 16, 2020. (Erik Schelzig, Tennessee Journal)

The state’s general fund surplus reached $1.35 billion in March, the eighth month of the budget year.

Sales taxes, which make up the vast majority of general fund revenues, were $40 million more than projected for the month and have accounted for $941 million of the surplus to date. Corporate franchise and excise taxes were $69 million more than expected in March, and $419 million over estimates for the year.

Here’s the full release from the state Finance Department:

Department of Finance and Administration Commissioner Butch Eley today announced that Tennessee tax revenues exceeded budgeted estimates in March. Overall March revenues totaled $1.26 billion, which is $57.1 million or 4.75 percent more than the state received in March of 2020 and $112.1 million more than the budgeted estimate for the month.

“Most of the growth in March can be attributed to sales and use taxes, corporate taxes and business taxes, which have been strong contributors to revenue growth for most of the year, “ Eley said. “March sales tax revenues, based on February sales tax activity, were positive across all industries except the restaurant and food services industry and apparel and accessories retailers. Additionally, sales tax receipts for the month were supported by approximately $39.7 million from remote sales and marketplace facilitator laws. To date, online sales tax revenues have accounted for about 65.4 percent of all sales tax growth to the state.

“We continue to be pleased with the overall growth in total taxes this fiscal year and we are encouraged at the prospect of future growth as Tennesseans become more comfortable resuming some activities. We are optimistic but cautious in anticipation of revenues in the months ahead.”

On an accrual basis, March is the eighth month in the 2020-2021 fiscal year.

General fund revenues were $115.2 million more than the budgeted estimate while the four other funds that share in state tax revenues were $3.1 million less than the estimates.

Sales tax revenues were $40.4 million more than the estimate for March and were 7.45 percent more than March 2020. For eight months revenues are $940.8 million more than estimated. The year-to-date growth rate for eight months was 7.15 percent.

Franchise and excise tax revenues combined were $69.1 million more than the budgeted estimate in March and the growth rate was 7.54 percent. For eight months, revenues are $419.1 million more than the estimate and the year-to-date growth rate is 4.85 percent.

Gasoline and motor fuel revenues for March decreased by 9.44 percent compared to March 2020 and were $6.3 million less than the budgeted estimate of $87 million. For eight months, fuel tax revenues are below estimate by $16.4 million.

Motor vehicle registration revenues were $2.2 million more than the March estimate, and on a year-to-date basis they are $9 million more than estimates.

Tobacco tax revenues were $1 million more than the March budgeted estimate of $18.6 million. For eight months, revenues are $8 million more than the year-to-date budgeted estimate.

Privilege tax revenues were $2.9 million more than the March estimate. On a year-to-date basis, August through March, revenues are $58.2 million more than the estimate.

Business tax revenues were $6.3 million more than the March estimate. For eight months, revenues are $27.1 million more than the budgeted estimate.

Hall income tax revenues for the month were $0.5 million more than the budgeted estimate. For eight months, revenues closely match the year-to-date budgeted estimate.

Mixed drink, or liquor-by-the-drink, taxes were $2.4 million less than the March estimate, and on a year-to-date basis, revenues are 23.5 million less than the budgeted estimate.

All other taxes were less than budgeted estimates by a net of $1.6 million.
Year-to-date revenues, August through March, are $1.42 billion more than the budgeted estimate. The growth rate for eight months is 4.97 percent. General fund revenues are $1.35 billion more than the budgeted estimate and the four other funds are $69.4 million more than estimated.

The budgeted revenue estimates for 2020-2021 are based on the State Funding Board’s consensus recommendation of November 26, 2019 and adopted by the second session of the 111th General Assembly in June 2020. Also incorporated in the estimates are any changes in revenue enacted during the 2020 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.

Here is the schedule for your 2020 Tennessee state budget hearings

Gov. Bill Lee speaks at a press conference on Tennessee’s coronavirus response in Nashville on March 16, 2020. (Erik Schelzig, Tennessee Journal)

Gov. Bill Lee’s administration is holding annual budget hearings with the heads of Tennessee agencies next week. The hearings will be live-streamed at www.tn.gov.

Here’s the schedule of events.

Monday, November 9

9:30-10:00 a.m. – Opening presentation from Department of Revenue and Dr. Bill Fox regarding Tennessee’s financial outlook.

10:00-10:30 a.m. – Revenue

10:45-11:30 a.m. – Health

1:00-1:15 p.m. – Labor and Workforce Development

1:45-2:45 p.m. – Economic and Community Development

3:00-3:30 p.m. – Military / TEMA

3:45-4:15 p.m. – Tourist Development

Tuesday, November 10

9:30-10:30 a.m. – Education

10:45-11:45 a.m. – Higher Education

1:00-2:00 p.m. – TennCare

2:15-3:15 p.m. – Children’s Services

3:30-4:30 p.m. – Mental Health and Substance Abuse Services

Thursday, November 12

9:30-10:30 a.m. – Intellectual and Developmental Disabilities

1:00-2:00 p.m. – Human Services

2:15-3:15 p.m. – Correction

3:30-4:00 p.m. – Veterans Services

Friday, November 13

9:30-10:30 a.m. – Safety and Homeland Security

10:45-11:15 a.m. – TBI

11:30 a.m. -12:00 p.m. – Finance & Administration

1:00-1:45 p.m. – General Services

2:00-2:45 p.m. – Human Resources

Monday, November 16

9:30-10:00 a.m. – Financial Institutions

10:15-10:45 a.m. – Commerce and Insurance

11:00-11:30 a.m. – Agriculture

1:30-2:15 p.m. – Transportation

2:30-3:15 p.m. – Environment and Conservation

3:30-4:00 p.m. – Education Lottery Corp.4:00 – Governor Bill Lee Media Availability

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.

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State Funding Board meeting canceled

A meeting of the State Funding Board scheduled for this week has been canceled.

The panel comprised of the comptroller, treasurer, secretary of state, and finance commissioner is tasked with coming up with the state’s revenue estimates and approving incentive deals for economic development projects.

Gov. Bill Lee told reporters over the weekend the State Funding Board would be meeting to discuss the fiscal “metrics” the state’s spending plan will have to be adjusted to.

A State Funding Board spokesman says this week’s meeting was canceled because there were no items on the agenda to discuss. Revenue projections could be discussed at a future date, though nothing has been scheduled.

State lawmakers plan to return to the Capitol complex next week to start laying the groundwork for their return into session on June 1.

(This post has been updated with comments from a spokesman for the State Funding Board)

General fund revenues fell $651M short of projections in April

Tennessee general fund revenue collections in April fell $651 million short of the projections established before the the coronavirus pandemic wrought havoc on the state’s economy.

Corporate franchise and excise taxes fell $487 million short of estimates, though a large portion of that may be explained by the governor’s decision to delay the filing deadlinefrom April to July. Sales tax revenues were $61 million less than projected in the month.

April revenue collections reflect economic activity in March, meaning the full budget impact of the pandemic won’t likely reveal itself until next month’s figures are released.

Here is the release form the state Department of Finance & Administration:

NASHVILLE – Tennessee Department of Finance and Administration Commissioner Butch Eley today announced that revenues for April were less than the monthly revenues from the previous year. Overall state revenues for April were $1.3 billion, which is a negative growth rate of 39.75 percent compared to last year and $693.8 million less than the state budgeted.

“The signs of economic downturn due to the COVID-19 pandemic have begun to appear in Tennessee’s April tax receipts,” Eley said. “April sales tax revenues, reflecting March taxable sales activity, were weakened as the state began to withdraw from its usual patterns of consumer spending by mid-month.  Franchise and excise tax receipts, along with Hall income and business taxes are also notably reduced due to filing extensions that will allow individuals and businesses to report their taxable activity later in the year.

“It has been 10 years since an economic downturn has impacted state revenues. The state’s large monthly revenue surpluses built up throughout the beginning of the year will now be tested as the pandemic’s impact begins to erase those gains.  Yet, we remain committed to keeping the state’s budget in balance despite the current challenges.”

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