Tennessee officials: COVID-19 dealt blow to revenues
NASHVILLE — The coronavirus dealt Tennessee revenues major blows in March and April, but the worst is yet to come and additional budget cuts are coming, state officials warned Tuesday.
Finance Commissioner Butch Eley said monthly tax collections in April were $693.8 million lower than last April. Overall state revenues for April were $1.3 billion.
“We are definitely seeing the signs of the COVID-19 pandemic in Tennessee tax revenues,” Eley told reporters.
During March, Tennessee sales tax collections, the state’s main revenue workhorse, which accounts for half of all taxes, began falling as residents and businesses began cutting back on purchases even before most local governments and Gov. Bill Lee started implementing orders or directives for Tennesseans to stay home as much as possible and shuttering businesses deemed nonessential.
Lee and local governments,
including Hamilton County, have largely lifted the restrictions and are relying on residents and businesses to take precautions to avoid becoming infected with the potentially
deadly virus.
Sales tax revenues were $61.2 million less than the estimate for April and they were 6.01% less than April 2019. On the strength of the economy before the virus hit, nine-month revenues are $182.4 million higher than estimated. The year-todate growth rate for nine months is 4.83%. But coming months are expected to erase that.
Franchise and excise tax revenues, which account for 15% of the budget, combined were $486.6 million lower than the budgeted estimate for April. Corporate taxes are normally due April 15, but Lee and state lawmakers extended the filing deadline to July.
As a result, growth rates plummeted 70.61% compared to the same month last year. For nine months, revenues are $249.2 million lower than the estimate and the year-to-date rate is 16.5% less over the same ninemonth period last year.
State lawmakers recessed in mid-March, passing at Lee’s urging a pared-down budget $39.8 billion budget that slashed $1 billion in spending. Lawmakers are scheduled to return June 1 and are looking at cutting hundreds of millions of dollars more in spending for the current fiscal year, which ends July 1, and even more next year.
The finance commissioner declined to say whether the remainder of planned pay raises for state workers, K-12 teachers and higher education employees will have to fall by the wayside because of the economic downturn. On their way out of the Capitol in March, lawmakers at Lee’s urging slashed half the proposed pay increase.
Other revenue figures show:
› Gasoline and motor fuel revenues for April decreased by 1.4% compared to a year ago and were $5.6 million less than the budgeted estimate of $108.7 million. For nine months revenues are more than estimated by $33.4 million.
› Motor vehicle registration revenues were $10.8 million less than the April estimate, and on a year-to-date basis they are $1.6 million less than estimates.
› Tobacco tax revenues were $3.2 million less than the April budgeted estimate of $18.8 million. For nine months, they are $1.3 million more than the budgeted estimate.
› Mixed drink taxes took a $7.4 million hit as restaurants, bars and nightclubs began closing, falling well below the budgeted estimate of $12.5 million.
› Revenue from the Hall income tax on dividend and interest for April was $62 million less than the budgeted estimate. For nine months, revenues are $55.5 million less than the budgeted estimate.
› Privilege tax revenues, levied on certain professionals, were $7.2 million less than the April estimate, and on a year-to-date basis, August through April, revenues are $34.4 million more than the estimate.
› Business tax revenues were $50.4 million less than the April estimate. For nine months, revenues are $41 million less than the budgeted estimate.
All other tax revenues exceeded estimates by a net of $0.6 million.
Year-to-date total revenues from August through April are $88.1 million less than budgeted estimates. The growth rate for nine months is negative 0.89%.
General fund revenues, which pay for most government functions such as education, health care and prison operations, are $164.2 million less than budgeted estimates. Four other funds are $76.1 million more than estimated.
This story will be updated. Contact Andy Sher at asher@times freepress.com. Follow him on Twitter @AndySher1.