Tennessee reports revenues drop off nearly 40% in April
Tennessee's state revenue collections dropped $693.8 million in April for a year-over-year decline of 39.75%, according to Department of Finance and Administration Commissioner Butch Eley.
“The signs of economic downturn due to the COVID-19 pandemic have begun to appear in Tennessee’s April tax receipts,” Eley said. “April sales tax revenues, reflecting March taxable sales activity, were weakened as the state began to withdraw from its usual patterns of consumer spending by mid-month."
Some of the decrease in revenue is due to extensions the state gave for the filing of franchise and excise taxes, business taxes on gross receipts, as well as income taxes on interest on bonds and notes and dividends from stocks. The April 15 deadline for filing those taxes was extended to June 15.
Franchise and excise tax revenue collections combined were $486.6 million lower than the budgeted estimate in April, a decrease of 70.61%.
General fund revenues were less than budgeted estimates by $650.9 million, while four other funds in which state tax revenues are shared with cities and counties were $42.9 million less than projected.
State sales tax revenues, which support 29% of the state general fund, were $61.2 million or 6.01% lower than the estimate for April. Tennessee does not have a state personal income tax. For the first nine months of the fiscal year, sales tax collections were $182.4 million or 4.83% higher than anticipated.
Gasoline and motor fuel tax revenues were $5.6 million less than budgeted, a 1.4% drop compared with April 2019, while revenues from motor vehicle registrations were down by $10.8 million.
Year-to-date revenues flowing into the state's general fund are $164.2 million less than budgeted.
“It has been 10 years since an economic downturn has impacted state revenues," Eley said. "The state’s large monthly revenue surpluses built up throughout the beginning of the year will now be tested as the pandemic’s impact begins to erase those gains.
"We remain committed to keeping the state's budget in balance despite the current challenges," he added.
In the current budget, the rainy day fund is projected to be a record high of $1.1 billion.
Tennessee's conservative financial management and low pension liabilities underpin triple-A general obligation bond ratings from Fitch Ratings, Moody's Investors Service and S&P Global Ratings.
The state had $1.98 billion of outstanding GO bonds as of June 30, 2019, according to the state's comprehensive annual financial report.
On April 2, Gov. Bill Lee issued a safer-at-home order saying it would expire April 14. At the time, he said data from the Tennessee Department of Transportation showed a steep drop-off in vehicle movement March 13-29, which likely contributed to the lower revenue collections.
Lee extended his order for residents to stay home until April 30, and began allowing most businesses in 89 of the state's 95 counties to reopen on May 1.
Since the state's first confirmed case of COVID-19 on March 5, Tennessee has had 16,370 confirmed cases of the virus and 273 deaths, Department of Health records showed Thursday.