(The Center Square) — Tennessee has now collected $3.7 billion more than budgeted in taxes and fees through the first 10 months of this fiscal year.
Those funds can then be used in future appropriations. The budgeted total, however, was adjusted by $2.9 billion in this year’s appropriations bill based on estimates from the state’s funding board, leaving $800 million in overages so far this fiscal year.
In all, Tennessee collected $1.6 billion in taxes and fees in May, which was $327.4 million more than budgeted. State tax collections were $41.8 million more than May 2021.
"May tax revenues reflect an increase compared to this time last year, although monthly growth was much lower for May compared to all other months that have reported year-to-date," said Tennessee Department of Finance and Administration Commissioner Butch Eley. "Sales tax revenue receipts continue to remain elevated, but corporate taxes held nearly flat when compared to May of last year. Monthly growth was also limited by the full phaseout of the Hall income tax, which resulted in a decline of $39.7 million, and a shift of approximately $20 million in professional privilege tax payments that will be recaptured next month.
The Hall income tax is defined by the Tennessee DFA as "imposed only on individuals and other entities receiving interest from bonds and notes and dividends from stock."
In sales tax alone, Tennessee collected $272.2 million more than the estimate for May and 9.31% more than May 2021. For the year, sales tax collections are $2 billion more than estimated, accounting for more than half of the state’s $3.7 billion overage.
Gas and fuel taxes were down 6.79% from May 2021, but they were $300,000 more than the budgeted estimate.
Privilege taxes were $7.3 million more than the May estimate while business taxes were $4.6 million more than estimates and mixed drink taxes were $7.8 million more than estimated.
"With two months remaining in the fiscal year, we will continue to monitor revenue and expenditures to keep Tennessee fiscally strong, especially as we see continued sharp increases in the consumer-price index that will likely have future economic effects," Eley said.