NASHVILLE, Tenn. – Total tax revenues for June were above budgeted expectations. Finance and Administration Commissioner Larry Martin announced today that overall Tennessee tax revenues in June, led by strong growth in franchise and excise (F&E) taxes, were $1.4 billion, which is $112.1 million more than the state budgeted.
“While we are encouraged by the positive revenue numbers, we need to be mindful of two important points,” Martin said. “First, the Funding Board in November 2016 revised upward for the fiscal year 2017 budget the anticipated positive variance for overall Tennessee taxes. As a result, $663.3 million of the fiscal year 2017 unaudited year to date positive variance of $731.3 million general fund revenue is already included in the fiscal year 2018 budget. Secondly, F&E tax payments by businesses are estimates of their tax liability and are subject to change.”
On an accrual basis, June is the eleventh month in the 2016-2017 fiscal year.
General fund revenues exceeded the budgeted estimate in the amount of $109.3 million. The four other funds that share in state tax revenues were also in excess of budgeted expectations by $2.8 million.
Sales tax revenues were $24.4 million more than the estimate for June. The June growth rate was positive 6.72%. For eleven months revenues have exceeded the original budgeted estimate by $273.3 million. The year-to-date growth rate for eleven months was positive 3.64%.
Franchise and excise taxes combined were $100.4 million above the budgeted estimate of $356.1 million. The growth rate for June was positive 14.57%. For eleven months revenues are $477.4 million above the budget estimate. The year-to-date growth rate was positive 13.87%, however, adjusting for two very large one-time payments received in the current year the underlying growth rate is positive 5.54%.
Privilege tax revenues were $15.2 million below the June estimate. For eleven months revenues are $5.9 million above the budgeted estimate.
Business tax revenues were $1.1 million more than the June estimate. Year-to-date revenues for eleven months are $17.3 million above the budgeted estimate.
Inheritance and estate tax revenues were $0.9 million below the June estimate. For eleven months revenues are $0.5 million above the budgeted estimate.
Hall income tax revenues for June were $1.6 million less than the budgeted estimate. For eleven months revenues are $45.5 million below the budgeted estimate.
Tobacco tax revenues were $0.9 million above the budgeted estimate of $22.4 million. For eleven months revenues are $2.1mllion less than the year-to-date estimate.
Motor vehicle registration revenues were $2.9 million above the June estimate, and on a year-to-date basis they are $13.5 million above estimates.
Gasoline and motor fuel revenues for June were $0.4 million less than the budgeted estimates. For eleven months revenues exceed budgeted estimates by $43.9 million.
All other taxes for June were above budgeted estimates by a net of $0.5 million.
Year-to-date revenues for eleven months were $789.6 million more than the budgeted estimate. The general fund recorded revenues in the amount of $731.3 million above the budgeted estimates, and the four other funds $58.3 million above.
The budgeted revenue estimates for 2016-2017 are based on the State Funding Board’s consensus recommendation of November 23, 2015 and adopted by the second session of the 109th General Assembly in April 2016. Also incorporated in the estimates are any changes in revenue enacted during the 2016 session of the General Assembly. These estimates are available on the state’s website at http://www.tn.gov/finance/article/fa-budget-rev.
On November 17, 2016, the Funding Board met to hear updated revenue projections from the state’s various economists. Meeting again on November 29, 2016, the board adopted revised recurring revenue growth ranges for the 2016-2017 fiscal year. The current fiscal year’s revised ranges recognize growth in total taxes from a low of 2.50% to a high of 3.00%, and a general fund growth from a low of 2.75% to a high of 3.25%.
On May 8, 2017, in the first session of the 110th General Assembly, the legislature passed the 2017-2018 budget, which included the Funding Board’s current year revised ranges and also the administration’s amendment to the proposed budget. The Governor signed the budget bill on May 25, 2017.
With passage of the appropriations act, Public Chapter 460, the General Assembly recognized in the current fiscal year an additional $751.9 million in total tax revenue of which $623.7 is recurring and a corresponding increase in general fund revenue in the amount of $663.3 million of which $481.1 million is recurring.