NASHVILLE – Tennessee’s sales tax collections continued to underperform in July, as state economists predicted in late spring.
Finance and Administration Commissioner Dave Goetz reported today that overall July revenues totaled $854.6 million or $49.6 million less than the state budgeted.
“The state sales tax is the core of the revenue stream in Tennessee, but in five of the past seven months we’ve had a negative growth rate in the sales tax,” Goetz said. “From January through July our growth rate in the sales tax was negative 1.13 percent, compared with the same period last year.
“Fortunately, in May, we prepared for the dip in collections, and continue to base our spending decisions conservatively so the state is able to navigate the economy.”
On an accrual basis, July is the twelfth month in the 2007-2008 fiscal year.
The general fund was under collected by $66.6 million, and the four other funds were over collected by $17.0 million.
Sales tax collections were $32.2 million less than the estimate for July. The July growth rate was negative 1.36%. For twelve months revenues are under collected by $236.7 million. The year-to-date growth rate for twelve months was 0.68%.
Franchise and excise taxes combined were $5.8 million under the budgeted estimate of $59.0 million. For twelve months revenues are under collected by $170.5 million.
Inheritance and estate tax collections were $8.9 million above the July estimate. For twelve months collections are $20.1 million above the budgeted estimate.
Tobacco tax collections were $2.8 below the budgeted estimate of $28.3 million. For twelve months revenues are under collected by $71.4 million.
Gasoline and motor fuel tax collections for July decreased by 10.70 %. For twelve months revenues are over collected by $7.8 million.
Year-to-date collections for twelve months were $483.2 million less than the budgeted estimate. The general fund was under collected by $511.3 million and the four other funds were over collected by $28.1 million.
The budgeted revenue estimates are based on the State Funding Board’s consensus recommendation adopted by the first session of the 105th General Assembly in June of 2007. The revised estimates for this fiscal year as presented in the 2008-2009 Budget Document assume an under collection in the general fund in the amount of $180.0 million, and a shortfall in total tax collections of $165.4 million. The State Funding Board met again on April 29 and May 1, 2008 and adopted revised revenue growth ranges for the current fiscal year ranging from 0.25% to 1.00% for total taxes and -0.50% to 0.25% in general fund taxes. These ranges recognize a revenue shortfall in total taxes from the original budgeted estimate in the amount of $562.8 million at the low end to $479.9 million at the high end. The ranges for the general fund recognize a shortfall of $564.0 at the low end to $494.5 million at the high end.
Total revenue collections on a year-to-date basis are $3.3 million less than the revised estimates adopted by the State Funding Board in May of this fiscal year, and $16.8 million below the revised general fund estimate.
Collections for July recognize a year end sales tax adjustment for the Transportation Equity Fund.
Year-to-date collections are subject to final accrual adjustments.