Tennessee tax revenues for February of $1.2 billion exceeded the budgeted estimate of $1.03 billion by $212 million or 20.6 percent, Commissioner of the Department Finance and Administration Butch Eley announced Friday.
February 2022 revenues were also $111.7 million more than what the state received in taxes in February 2021, reflecting a growth rate of nearly 10 percent.
“Sales tax revenues, reflecting January’s taxable consumer activity,” Eley said.
He added the state’s primary source of tax revenues “outperformed our budgeted revenue estimate increasing the state’s positive revenue balance for the year.”
Sales tax revenues accounted for $163.5 million or 77 percent of the revenue surplus in February.
Eley addressed the 40-year high inflation as a positive contributor to the state’s revenues up to this point in the fiscal year, as well as its potential negative impact in the future.
“We continue to experience increasing tax revenues tied to rising consumer prices and real estate transactions,” stated Eley.
“However,” he later added. “We remain concerned that mounting inflation and rising fuel costs will restrain future consumer spending. Therefore, we will continue to closely monitor economic conditions and our monthly tax receipts through the remainder [of the] year.”
The state’s corporate or franchise and excise tax receipts of $72 million were nearly double the budgeted estimate of $37 million, contributing almost $35 million or 16.5 percent of the surplus revenues.
The third major contributor to the state’s strong tax collections in February was the privilege tax, where there was $42.6 million in receipts or $14.4 million and over 50 percent more than the budgeted estimate of $28.2 million.
Other state receipts that exceeded the budget estimates were the Hall income, inheritance and estate, gasoline, petroleum special, beer, mixed drink, business, privilege, motor vehicle fuel, severance and coin-operated amusement taxes for a total of $10.8 million over the budgeted estimate.
Meanwhile, February revenues for the tobacco, motor vehicle registration, motor vehicle title, gross receipts, TVA payments in lieu of taxes and alcoholic beverage taxes were $11.7 million less than the budgeted estimates.
For the 2021-2022 fiscal year, which began July 1 making February the seventh month on an accrual basis, the state’s revenue collections are $2.1 billion or 24 percent higher than the budgeted estimate and $1.7 billion or 18 percent at the same time last fiscal year
Comparatively, the budget surplus at this time in the last fiscal year was $1.3 billion, which was 16 percent over the year-to-date estimate.
All four of the state’s major funds are ahead of budgeted estimates for the year. The General Fund is $2 billion or 28 percent, Highway Fund $35.7 million or 6.3 percent, Sinking Fund $8.8 million or 4.4 percent and the City & County Fund $82 million or 10 percent more than the year-to-date estimates.
All four major funds are also ahead of last year by $1.7 billion or nearly 18 percent.
Revenue estimates for the 2021-2022 budget year, based on the State Funding Board’s recommendations of November 24, 2020, were adopted by the legislature in April 2021 and include any subsequent changes enacted during the legislative session.
The tables showing the monthly and year-to-date revenue collections by tax and the fund balances can be viewed here.
Additional information from the Department of Finance and Administration regarding the monthly distribution of tax revenues and the methodology for monthly estimates of state tax revenues for the current fiscal year can be found here.
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Laura Baigert is a senior reporter at The Star News Network, where she covers stories for The Tennessee Star and The Georgia Star News.
