TN Tax Collections Still Growing

Press Release from the State of Tennessee, Aug. 9, 2011:

NASHVILLE – Tennessee revenue collections continued a very modest growth trend in July. Finance and Administration Commissioner Mark Emkes today announced a net positive growth of 1.17% over July collections of one year ago. Overall July revenues were $843.3 million or $19.9 million more than the state budgeted.

July marks the 12th consecutive month this year in which total collections have exceeded the budgeted estimates. July sales tax collections represent consumer spending that took place in the month of June.

“The year-to-date growth in both sales and corporate tax collections indicates a very slow economic recovery in Tennessee, and it means we must continue to cautiously move forward in managing the state’s budget,” Emkes said. “Additional concern for us at the state level is that economic indicators are showing a very slow national recovery.”

On an accrual basis, July is the twelfth month in the 2010-2011 fiscal year.

The general fund was over collected by $2.3 million, and the four other funds were over collected by $17.6 million.

Sales tax collections were $30.5 million more than the estimate for July. The July growth rate was 4.87%. For twelve months revenues are over collected by $226.1 million. The year-to-date growth rate for twelve months was positive 4.62%.

Franchise and excise taxes combined were $5.0 million under the budgeted estimate of $55.4 million. The growth rate for July was negative 2.10%. For twelve months revenues are over collected by $42.8 million and the year-to-date growth rate was positive 6.66%.

Inheritance and estate tax collections were $5.6 million below the July estimate. For twelve months collections are $21.1 million above the budgeted estimate.

Privilege tax collections were $2.4 million below the July budgeted estimate. For twelve months collections are $12.0 million less than the budgeted estimate, and the year-to date growth rate was positive 1.57%.

Tobacco tax collections were $557,000 below the budgeted estimate of $26.1 million. For twelve months revenues are under collected by $7.7 million.

Gasoline and motor fuel tax collections for July were under collected by $350,000. For twelve months revenues are over collected by $10.3 million.

All other taxes for July were over collected by a net of $3.3 million.

Year-to-date collections for twelve months were $269.4 million more than the budgeted estimate. The general fund was over collected by $221.3 million and the four other funds were over collected by $48.1 million.

The budgeted revenue estimates for 2010-2011 are based on the State Funding Board’s consensus recommendation of April 7, 2010 and adopted by the second session of the 106th General Assembly in June. They are available on the state’s website at http//www.tn.gov/finance/bud/budget.html.

The State Funding Board met on the 8th and 14th of December 2010, and again on February 7, 2011. As a result of these meetings the board adopted mid-year revised revenue ranges for 2010-2011. The board issued a formal letter addressed to the Governor and Chairman of House and Senate Finance Ways and Means Committees dated February 25, 2011 detailing the board’s actions.

The 2010-2011 revised ranges adopted by the board reflect growth rates ranging from 3.60% to 4.00% in total taxes, and 3.95% to 4.45% in general fund taxes.

Based on the board’s consensus recommendation, the official budgeted estimates for 2010-2011 were revised in March 2011.

The revised estimates are reflected on pages A-72 and A-74 in the 2011-2012 Budget Document and assume an over collection in total taxes in the amount of $198.5 million, and an over collection of $161.3 million in general fund taxes.

Year-to-date collections through July compared to the February revision are $70.9 million above the total estimate, and $42.8 million above the general fund estimate. The four other funds that share in state tax collections are $28.1 million above the revised estimate.

The funding board met again on April 12, 2011 to hear updated revenue estimating presentations on the state’s near-term economic outlook for fiscal years 2010-2011 and 2011-2012, taking final action on April 15th to revise the February ranges.

The action taken by the board in April recognized an increase at the top of the range for 2010-2011 from 4.00% to 4.15% in total taxes and from 4.45% to 4.50% in general fund taxes. The result of this action increased projected revenues for total taxes by $15.1 million and general fund taxes by $15.2 million for this fiscal year. This increase was recognized in the administration’s budget amendment and adopted by the General Assembly on Saturday May 21, 2011.

Year-to –date collections through July compared to the final action taken by the board and approved by the General Assembly are $55.8 million above the total estimate, and $27.6 million above the general fund estimate.

Year-to-date collections for 2010-2011 are subject to final accrual adjustments.