State of Tennessee Revenues Exceeded Budgeted Estimates for April 2023

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NASHVILLE – Tennessee revenues exceeded budgeted estimates for the month of April. Finance and Administration Commissioner Jim Bryson today reported that April total tax revenues were $3 billion, which is $54.4 million more than April of last year and $429.1 million more than the budgeted estimate. The total growth rate for the month was 1.81 percent.

“April total tax revenues reflect a significant slowdown in growth compared to the beginning of this fiscal year,” Bryson said. “While receipts from sales and use taxes, franchise and excise taxes, and the state business tax preceded all tax sources in outperforming budgeted estimates for the month, we are noticing signs of slower economic activity. Gas tax revenues were notably lower for the month and real estate activity within the state continues to remain depressed, thus greatly reducing realty transaction taxes which are reported under the privilege tax category.

“It is expected that state revenues will continue to outperform our monthly budgeted estimates and that we will soon exceed the annual revenue estimates set at the beginning of the fiscal year.  However, with only three reporting months left for the year, we are carefully watching our ability to meet the revised revenue levels that were recommended at last year’s November Funding Board meeting and included in the general assembly’s appropriations bill passed last month. As such, we will closely monitor collections and expenditures until year end.”

On an accrual basis, April is the ninth month in the 2022-2023 fiscal year.

General fund revenues were $413 million more than the budgeted estimate while the four other funds that share in state tax revenues were $16.1 million more than the estimates.

Sales tax revenues were $121.4 million more than the estimate for April and 3.92 percent more than April 2022. For nine months, revenues are $1.1 billion higher than estimated. The year-to-date growth rate for nine months was 8.30 percent.

Franchise and excise tax revenues combined were $271.3 million more than the budgeted estimate in April and the growth rate compared to April 2022 was 1.54 percent. For nine months, revenues are $708 million more than the estimate and the year-to-date growth rate is 7.99 percent.

Gasoline and motor fuel revenues for April decreased by 6.98 percent compared to April 2022 and were $4.1 million less than the April budgeted estimate of $113.3 million.  For nine months, revenues are less than estimates by $12.5 million.

Motor vehicle registration revenues were $6.7 million more than the April estimate, and on a year-to-date basis they are $32.5 million more than estimates.

Tobacco taxes were $1.1 million more than the April budgeted estimate of $18.2 million. However, for nine months, they are $12 million less than the budgeted estimate.

Privilege taxes were $11.2 million less than the April estimate, and on a year-to-date basis, August through April, revenues are $56.6 million less than the estimate.

Business taxes were $32.5 million more than the April estimate. For nine months, revenues are $57.6 million more than the budgeted estimate.

Mixed drink, or liquor-by-the-drink, taxes were $5.9 million more than the April estimate, and on a year-to-date basis, revenues are $49.2 million more than the budgeted estimate.

All other tax receipts were more than estimates by a net of $5.5 million.

Year-to-date revenues, August through April, are $1.9 billion more than the budgeted estimate. The growth rate for nine months is 6.27 percent. General fund revenues are $1.8 billion more than the budgeted estimate and the four other funds are $151 million more than estimated.

The budgeted revenue estimates for 2022-2023 are based upon the State Funding Board’s consensus recommendation from November 23, 2021 and adopted by the second session of the 112th General Assembly in April 2022. Also incorporated in the estimates are any changes in revenue enacted during the 2022 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 21, 2022, the State Funding Board met again to hear updated revenue projections from various state economists. Following this meeting, on November 28, 2022, the board decided to adopt revised revenue growth ranges for the current fiscal year. The recurring growth ranges adopted include a low of 6.82 percent to a high of 7.27 percent for total taxes and a recurring range low of 7.20 percent to a high of 7.70 percent for general fund taxes.

On April 20, 2023, in the first session of the 113th General Assembly, the Legislature passed House Bill 1545/Senate Bill 1532, which included the Funding Board’s revised revenue ranges for the current year. Upon passage, an additional $2.7 billion ($2,711,200,000) in total funds and $2.6 billion ($2,588,600,000) in general fund revenue were added to this year’s original budgeted estimates. The approved appropriations bill currently awaits the governor’s signature.

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