State of Tennessee Revenues Report for October 2023

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NASHVILLE – December 1, 2023 – Tennessee Department of Finance and Administration Commissioner Jim Bryson today announced that revenues were less than budgeted estimates in October.  Tennessee’s tax collections were slightly lower in October than the previous year driven by the three-month grocery tax holiday and lower business tax collections.  Overall October revenues were $1.48 billion, which is $50.9 million less than October of last year and $62.1 million less than the budgeted estimate. The growth rate for October was negative 3.33 percent. Sales taxes collected by the state in October reflect September consumer spending.

“October revenues fell short of expectations primarily because of losses in sales tax receipts, reduced corporate tax filings, and depressed realty transfer and realty mortgage tax collections,” Bryson said. “Lower collections from each of these taxes represent concerns we have expressed for some time. The sales tax holiday on groceries decreased state collections.  Franchise and excise tax collections were also lower, as more corporate refunds from overpayments were processed during the month. Furthermore, real estate transaction taxes, continue to weaken as interest rates remain high.

“We continue to closely watch the current economic environment and will carefully monitor our revenue and expenditure patterns for the balance of this fiscal year.”

On an accrual basis, October is the third month in the 2023-2024 fiscal year.

General fund revenues for October were $61.7 million less than the budgeted estimate, and the four other funds that share in state tax revenues were $0.4 million less than the budgeted estimates.

Sales tax revenues were $23 million less than the estimate for October. The October growth rate was negative 1.63 percent. Year-to-date revenues are 1.49 percent more than this time last year.

Franchise and excise taxes combined were $26.7 million less than the October budgeted estimate of $110.2 million. The October growth rate was negative 26.18 percent, and the year-to-date corporate tax growth rate is negative 9.02 percent.

Gasoline and motor fuel revenues decreased by 3.26 percent and were $4.5 million less than the budgeted estimate of $113 million. Year-to-date fuel tax collections are greater than budgeted estimates by 1.52 percent.

Motor Vehicle Registration revenue receipts increased by 72.22 percent from this same time last year when the state allowed for a one-year registration renewal waiver and were $5 million more than the October estimate.

Tobacco tax revenues for the month were $1.6 million less than the budgeted estimate of $18.5 million. For three months, revenues are $4.7 million less than the budgeted estimate.

Privilege tax revenues were $13.4 million less than the budgeted estimate of $54 million, and on a year-to-date basis are less than estimates by $38.5 million.

Business tax revenues were $1.9 million more than the budgeted estimate. Year-to-date, business tax revenues are $1.9 million more than the budgeted estimate.

Mixed drink, or liquor-by-the-drink, taxes were $1.4 million more than the October estimate, and on a year-to-date basis, revenues are $2.6 million more than the estimate.

All other tax revenues were less than estimates by a net of $1.2 million.

Year-to-date revenues for three months were $108.9 million less than the budgeted estimate. August through October, general fund revenues were $114.7 million less than estimates and the four other funds that share in state tax revenues exceeded estimates by $5.8 million.

The budgeted revenue estimates for 2023-2024 are based upon the State Funding Board’s consensus recommendation from November 28, 2022 and adopted by the first session of the 113th General Assembly in April 2023. Also incorporated in the estimates are any changes in revenue enacted during the 2023 session of the General Assembly. These estimates are available on the state’s website at https://www.tn.gov/content/tn/finance/fa/fa-budget-information/fa-budget-rev.html.