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Press Releases

TN Revenue Up in 1st Month of New Fiscal Year Collections

Press release from the Tennessee Department of Finance & Administration; September 12, 2014:

NASHVILLE, Tenn. – Tennessee revenue collections exceeded budgeted estimates for the first month of the state’s fiscal year. Finance and Administration Commissioner Larry Martin today reported that overall August revenues were $870 million, which is $31 million above collections a year ago. The growth rate for August was 3.70%.

“Sales taxes collected by retailers in July grew 6.73 percent, the largest month-over-month growth we have experienced in the past 27 months,” Martin said. “Corporate tax collections grew by 9.25 percent, but were still slightly under budgeted expectations. All other taxes, taken as a group, had negative growth of 5.33% but were $6.1 million above the budgeted estimate for August.

“While we are encouraged by the August numbers, we continue to be concerned about the relatively slow economic recovery in Tennessee. It is important for us to maintain our close controls on state spending and to carefully monitor revenue trends.”

On an accrual basis, August is the first month in the 2014-2015 fiscal year.

August collections were $24.4 million more than the budgeted estimate. The general fund was over collected by $22.7 million and the four other funds that share in state tax collections were over collected by $1.7 million.

Sales tax collections were $19.2 million more than the estimate for August. The August growth rate was positive 6.73%.

Franchise and excise taxes combined were $0.9 million below the budgeted estimate of $35.5 million, and the growth rate was positive 9.25%.

Gasoline and motor fuel collections increased by 4.91% from August of 2013, and were $0.3 million above the budgeted estimate of $70.1 million.

Inheritance tax collections were $2.5 million above the budgeted estimate.

Privilege tax collections were $1.8 million more than the budgeted estimate of $21.4 million

Business tax collections were $2.4 million above the August estimate.

Tobacco tax collections for the month were under collected by $1.1 million.

All other taxes were over collected by a net of $0.2 million.

The budgeted revenue estimates for 2014-2015 are based on the State Funding Board’s consensus recommendation of December 17th, 2013 and adopted by the second session of the 108th General Assembly in April 2014. They’re available at http://www.tn.gov/finance/bud/Revenues.shtml.

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Press Releases

June 11th Straight Month of ‘Positive Growth’ in TN Revenue Collections

Press release from the Tennessee Department of Finance & Administration; July 11, 2013:

NASHVILLE – Total Tennessee tax collections for June were weak, but exceeded budgeted expectations. Finance and Administration Commissioner Larry Martin reports that overall June revenues were $1.2 billion, which is $3.2 million more than the state budgeted. It marks the 11th consecutive month this year in which total collections have experienced positive growth.

Sales tax collections in June were flat, while corporate tax collections exceeded the budgeted estimate. All other tax sources, taken as a group, were above the budgeted estimates.

“The year-to-date growth rate for all taxes remains low and points to an economy that is still anemic and recovering slowly,” Martin said. “For the remainder of this year, we will continue to closely monitor collections and expenditures.”

On an accrual basis, June is the eleventh month in the 2012-2013 fiscal year.

The general fund was over collected by $8.9 million, and the four other funds were under collected by $5.7 million.

Sales tax collections were $0.1 million less than the estimate for June. The June growth rate was positive 1.18%. For eleven months revenues are under collected by $27.8 million. The year-to-date growth rate for eleven months was positive 1.67%.

Franchise and excise taxes combined were $2.3 million above the budgeted estimate of $338.9 million. The growth rate for June was negative 8.85%. For eleven months revenues are over collected by $278.9 million and the year-to-date growth rate was 8.76%.

Privilege tax collections were $0.9 million above the June estimate. For eleven months collections are $30.1 million above the budgeted estimate.

Business tax collections were $1.2 million more than the June estimate. Year-to-date collections for eleven months are $1.4 million above the budgeted estimate.

Inheritance and estate tax collections were $7.9 million above the June estimate. For eleven months collections are $35.4 million above the budgeted estimate.

Tobacco tax collections were $2.4 million below the budgeted estimate of $27.8 million. For eleven months revenues are under collected by $11.0 million.

Gasoline and motor fuel collections for June were under collected by $4.0 million. For eleven months revenues are under collected by $22.5 million.

All other taxes for June were under collected by a net of $2.6 million.

Year-to-date collections for eleven months were $322.8 million more than the budgeted estimate. The general fund was over collected by $328.6 million and the four other funds were under collected by $5.8 million. The FY 2013 revised budget assumed an over collection of $305.9 million in General Fund Taxes. Therefore, the amount of over collection, August through June, compared to what’s in the revised FY 2013 budget is $16.9 million ($322.8 million minus $305.9 million).

The budgeted revenue estimates for 2012-2013 are based on the State Funding Board’s consensus recommendation of December 19th, 2011 and adopted by the second session of the 107th General Assembly in April 2012. They are available on the state’s website at http://www.tn.gov/finance/bud/budget.html.

The State Funding Board met on December 14, 2012 to hear updated revenue projections from the state’s various economists. The board met again on December 19th and adopted revised revenue ranges for 2012-2013. The revised ranges assume an over collection from the July 2012 budgeted estimate in the amount of $203.0 million to $287.3 million in total taxes and in the amount of $224.2 million to $305.9 million in general fund taxes for the current fiscal year.

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Press Releases

July Brings in $9.9M More Taxes Than State Budgeted

Press release from the Tennessee Department of Finance & Administration; August 9, 2012: 

NASHVILLE – Tennessee revenue collections continued their upward trend in July, but at a much slower pace compared to recent months. Finance and Administration Commissioner Mark Emkes today announced a net positive growth of 4.46% over July collections of one year ago. Overall July revenues were $880.9 million, which is $9.9 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.

“We continue to believe the growth in sales and corporate tax collections indicates a very slow economic recovery in Tennessee, but we also continue to see mixed results at the national level,” Emkes said. “The latest published leading economic indicators show that the U.S. economy decelerated in the second quarter, which causes concern at the state level.

“We’ll close fiscal year 2012, which ended June 30, with a revenue surplus which will help maintain a balanced budget in fiscal 2012-2013.”

On an accrual basis, July is the twelfth month in the 2011-2012 fiscal year.

The general fund was over collected by $2.7 million, and the four other funds were over collected by $7.2 million.

Sales tax collections were $14.7 million more than the estimate for July. The July growth rate was 3.30%. For twelve months revenues are over collected by $241.8 million. The year-to-date growth rate for twelve months was positive 6.57%.

Franchise and excise taxes combined were $0.8 million under the budgeted estimate of $55.5 million. The growth rate for July was positive 8.64%. For twelve months revenues are over collected by $308.2 million and the year-to-date growth rate was positive 22.26%.

Inheritance and estate tax collections were $10.1 million below the July estimate. For twelve months collections are $37.9 million above the budgeted estimate.

Privilege tax collections were $1.1 million above the July budgeted estimate. For twelve months collections are $9.0 million more than the budgeted estimate, and the year-to date growth rate was positive 11.71%.

Business tax collections were $1.0 million less than the July estimate. Year-to-date collections for eleven months are $15.9 million below the budgeted estimate.

Tobacco tax collections were $2.6 million below the budgeted estimate of $25.9 million. For twelve months revenues are under collected by $18.5 million.

Gasoline and motor fuel tax collections for July were over collected by $3.4 million. For twelve months revenues are under collected by $5.1 million.

All other taxes for July were over collected by a net of $5.2 million.

Year-to-date collections for twelve months were $563.8 million more than the budgeted estimate. The general fund was over collected by $543.0 million and the four other funds were over collected by $20.8 million. The FY 2012 revised budget assumed an over collection of $209.6 million in General Fund Taxes. Therefore, the amount over collected above and beyond what’s already in the budget is $333.4 million ($543.0 million minus $209.6 million).

The budgeted revenue estimates for 2011-2012 are based on the State Funding Board’s consensus recommendation of April 15, 2011 and adopted by the first session of the 107th General Assembly in May. They are available on the state’s website at http://www.tn.gov/finance/bud/budget.shtml.

The State Funding Board met on December 9th and 14th to hear updated revenue projections from the state’s various economists. The board met again on December 19th and adopted revised revenue ranges for 2011-2012. The revised ranges assume an over collection of $187.8 million to $220.5 million in total taxes and $177.0 million to $209.6 million in general fund taxes from the fiscal year 2011-2012 budgeted estimate. The revised estimates are reflected on pages A-74 and A-76 in the 2012-2013 Budget Document.

Year-to-date collections for 2011-2012 are subject to final accrual adjustments.

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Business and Economy

Governor Analyzing AG’s Latest ‘Nexus’ Opinion

Gov. Bill Haslam said Tuesday it was too early for him to say what the ramifications of Attorney General Robert Cooper’s latest opinion related to Amazon.com might mean for the state.

Cooper issued an opinion dated Oct. 3 that said, as a general rule, the state cannot waive a taxpayer’s obligation to collect sales taxes and that the fact sales are made electronically does not change a retailer’s liability for collecting and remitting the tax.

But the opinion also states that the Commissioner of Revenue has “substantial discretion” in determining the best measures to enforce the state’s tax laws.

Haslam told reporters Tuesday after making a speech in Nashville that he had just heard about the opinion and had little to comment on, but he said it is possible it could mean there might have to be legislative action regarding a state agreement with Amazon.

“That could be one of the outcomes, that we’d have to have some legislation passed to set up whatever the new arrangement ends up being,” Haslam said.

The Haslam administration has been involved in talks with Amazon for a long-term understanding of where Amazon stands on having to collect the state’s sales tax. The administration of Gov. Phil Bredesen agreed to allow Amazon to build two distribution centers in the state without collecting sales taxes, in exchange for their bringing hundreds of jobs to the state.

Haslam said any long-term agreement his administration were to make with Amazon would include as part of the deal that the state can publicly say what is in the agreement.

“It has become such a big deal, I think it’s important that when we do come to an agreement we be able to talk about it,” Haslam said. “So that would be part of the agreement we make with Amazon.”

Commissioner of Revenue Richard Roberts has said he cannot publicly discuss any arrangement with Amazon — or even if a deal exists with Amazon — because of privacy elements of the law.

Haslam’s comments Tuesday indicate that the public interest would be so high that his administration would feel compelled to make it part of the deal that the agreement be public. Lack of transparency has been one of the primary points of contention about the Bredesen deal with the Internet retail company.

Haslam did not address Amazon in his speech to the First Tuesday lunch group of Republicans. But he covered several other issues, including the fact he believes the outcome of the state’s request for a waiver from the federal government on the No Child Left Behind law will probably not be known until late November or early December.

He was asked why it would take so long for a decision.

“I actually don’t know the answer to that. I was initially hopeful, quite frankly, when we went up there, we’d hear an answer by late October, early November,” Haslam told reporters after his speech. “I understand now it’s about 30 days past that. I don’t really know that. I wish I did.”

Haslam also addressed the affirmation of the state’s bond ratings. After a recent trip by state officials to New York to state Tennessee’s case for strong fiscal management, the major rating agencies announced this week that Tennessee maintains its current ratings.

The state keeps its AAA rating from Moody’s Investor Service and Fitch, and it retains its AA+ rating from Standard & Poor’s. Standard & Poor’s gave the state a positive outlook, but Moody’s put the state on “negative outlook,” which is believed to be tied to concerns about the effect on states by the overall national economy.

The attorney general’s opinion that could affect Amazon appears to say that a retailer cannot dodge tax collection simply because its transactions are online.

In the analysis of the issue, the attorney general says:

“In cases where nexus (physical presence) does exist, the retailer is liable for collecting and remitting Tennessee sales taxes regardless of the method by which the retailer accepts orders for goods sold to Tennessee customers. If the retailer’s in-state activities are sufficient to establish nexus, the fact that orders are placed by electronic means, such as by telephone or the Internet, does not affect the retailer’s state sales tax obligations.”

The opinion says if a distribution house is owned by a retailer’s subsidiary that nexus exists only if the subsidiary’s activity is “significantly associated” with maintaining a market in the state.

The attorney general’s analysis further states:

“We refer you to recent Attorney General Opinion No. 11-55, in which this Office stated that, where legislation unambiguously imposes state sales tax obligations relative to specific transactions, the State of Tennessee cannot contractually waive a taxpayer’s obligation to pay the tax. … In reiterating this principle, however … we note the Commissioner of Revenue must necessarily possess considerable discretion in determining the appropriate measures to take to administer and enforce Tennessee’s tax laws.”

“…The Commissioner’s exercise of discretion is particularly appropriate when the enforcement of a tax may be debatable and must be balanced and coordinated with the Commissioner’s other duties and priorities in administering all of the taxes entrusted to him.”

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Press Releases

AMSF: Claims Amazon.com Deserves Special Treatment ‘Intellectually Insulting’

Press Release from The Alliance for Main Street Fairness in Tennessee; Oct. 4, 2011: 

Tennessee Attorney General States Amazon Has Nexus; If Internet Retailer Can Collect In Golden State, It Can Collect In Volunteer State? 

Nashville, TN – The Alliance for Main Street Fairness (AMSF) in Tennessee today issued the following statement in response to an opinion issued by the state’s attorney general demonstrating under current law Amazon.com clearly has nexus or a physical presence in Tennessee and therefore must abide by the law just as retailers in the state do every single day. This opinion follows news from California where Amazon has conceded it can and will collect sales taxes.

“As more facts and information are made public, it is becoming increasingly clear that Amazon.com’s argument against sales tax collection is evaporating. A recent opinion by Tennessee’s attorney general proves that under the law as written Amazon has a physical presence in the state and should be collecting sales taxes when its distribution centers open,” said Mike Cohen, spokesperson for the Alliance for Main Street Fairness (AMSF) in Tennessee. “Amazon first stated they couldn’t collect sales taxes, then stated it was unconstitutional, and now, in California, they have conceded they can, should and will collect. Amazon is building the same distribution centers in California that they are in Tennessee, and they should play by the same rules in our state. Any claim by Amazon that they merit a special deal in Tennessee is intellectually insulting and just plain wrong. Amazon must follow the law and collect sales taxes just like every other retailer in the state.”

To view the attorney general’s opinion, click here.

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Business and Economy Liberty and Justice Tax and Budget Transparency and Elections

Retailers’ Group: $3 Billion At Stake in Online Sales Tax Issue

A brick-and-mortar retailers’ group has warned that the state could lose out on $3 billion in revenue and more than 10,000 jobs over the next five years if online retailers continue not to collect sales taxes.

The projections are in an study commissioned by the Alliance for Main Street Fairness, a national organization made up of retailers ranging from small businesses to Wal-Mart.

“From the Alliance point of view, this really tells us the Amazon deal is a bad deal for Tennessee. It’s going to cost us more jobs than it’s going to gain,” said Mike Cohen, the organization spokesman, said during a press conference at Cumberland Transit bike shop in Nashville.

The Alliance opposes a deal the Bredesen administration struck with online retailer Amazon.com, which promised to build distribution centers in Hamilton and Bradley counties under an agreement the company would not have to collect sales taxes.

Gov. Bill Haslam has said the state should honor the deal, but that he wants Amazon to collect sales taxes on its transactions in Tennessee in the future, and his administration is currently negotiating with Amazon to find a long-term solution. As of last week, Haslam said he had nothing new to report.

The Legislature is generally split about what the state should do. Sen. Jim Kyle, the top ranking Senate Democrat, is too.

“It will take the local business community to drive that Amazon issue,” Kyle said during a stop outside the University of Memphis during the Democratic Jobs Tour Monday. “There are two sides to it. One is keeping your word and the other is, doing what’s the right thing to do. The unfortunate thing here is when you’re keeping your word, you’re not doing the right thing.”

The Alliance’s study leaned heavily on a report out of the University of Tennessee, which found the state would miss out on collecting as much as $456.1 million in local and state sales taxes next year on online purchases. Taxpayers last year paid more than $8 billion in state and local sales taxes, according to documents from the Department of Revenue.

Younger Associates, which performed the analysis for the Alliance, asserts there is a direct relationship between state and local government spending and the number of jobs supported. If retailers like Amazon.com are not forced to collect sales taxes, about 6,900 jobs would be lost next year, leading to a loss in wages and decreases in consumer spending to purchase other taxed items such as gas, cars, alcohol, tobacco and amusement.

The study says that would translate to additional lost sales tax collections — in total, $480.7 million in 2012, followed by a loss of $3.02 billion in taxes and 10,567 jobs in five years.

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News

February State Revenue Collections Likely ‘Worse Than We Had Hoped’

Lackluster tax collections could force the state to lower its revenue estimates even further as lawmakers on Capitol Hill debate how to best balance the books, the state budget director said Tuesday.

That’s going to mean lawmakers may have many millions of dollars less than the $10.1 billion they expected to work with this year as they enter the final months of the legislative session. They plan to spend that time finalizing a state spending plan based on expected revenues from gasoline, sales and other taxes.

“I think there’s a good prospect that we may have to lower our revenue estimates some more, but I really cannot tell you how much,” Bill Bradley, state budget director, told members of the Senate Finance, Ways and Means committee Tuesday.

The amount of revenue collected in February for January sales is still being finalized, and those numbers will likely be released next week.

“I certainly would think that the collections, when we close for February, are likely to be worse than we had hoped for,” Bradley said.

February would mark the twenty-first consecutive month revenues have been down in Tennessee.

Revenue from December sales — which were collected in January — were $16 million less than the state projected. The month before, revenues were down $54 million.

The most recent revenue collections indicate that Tennessee has collected $185 million less than it expected since its fiscal year began in July.

If the state lowers revenue estimates for the rest of the current budget year, the state will also have to lower the base budget for the next year, said Lola Potter, spokeswoman for the Department of Finance and Administration.

Otherwise, she said,  “we would be digging an even bigger hole for the state.”

The state will want to start the new budget year assuming the same revenue trend as prior months, she said. If the state has less revenue through June than it expected, she said the state can expect collections to follow that trend.

“To keep the state’s budget in balance we have to lower the budget in line with those revenue projections,” she said.

Estimates on how much the state would collect in tax revenue were first lowered in December to $10.12 billion from $10.29 billion.