Tennessee collects $2.1B more than estimated in taxes, fees for fiscal year

(The Center Square) – Tennessee has collected $2.15 billion more in taxes and fees than it budgeted for the first seven months of the fiscal year, according to Tennessee Department of Finance and Administration Commissioner Butch Eley.

February’s $1.2 billion collection was $212 million more than estimated and $111.7 million more than February 2021.

“Underestimating revenues creates unplanned surpluses which can be spent the following year or saved in the rainy-day fund,” wrote Sycamore Institute Policy Director Mandy Pellegrin, who keeps tabs on the monthly totals on the group’s tax revenue tracker. “The trade-off of a surplus is that policymakers may have preferred to either spend the money or reduce taxes in the current year.”

Sales tax collections were $163.5 million more than estimated for February and are $1.3 billion more than estimated this fiscal year.

Gov. Bill Lee’s proposed budget estimated there will be a $3 billion surplus in taxes and fees by the end of the fiscal year.

“With a large year-to-date revenue balance, we have confidence that the state should finish the 2021-2022 fiscal year above our established revenue estimates,” Eley said. “However, we remain concerned that mounting inflation and rising fuel costs will restrain future consumer spending. Therefore, we will continue to closely monitor economic conditions and our monthly tax receipts through the remainder year.”

Privilege taxes were $14.4 million more than estimated in February and are $103.5 million over estimates for the fiscal year. Franchise and excise tax collections were $35 million over February estimates and are $714.2 million over for the fiscal year.

Gas and motor fuel taxes ($5.3 million over estimate), motor vehicle registrations ($7 million over), business taxes ($1.6 million over) and mixed drink taxes ($3.5 million over) all exceeded February estimates.

“We continue to experience increasing tax revenues tied to rising consumer prices and real estate transactions,” Eley said. “Additionally, corporate tax revenues, or franchise and excise tax receipts, surpassed budgeted expectations while all other taxes taken together revealed minor growth.”

One tax category that finished below estimates was tobacco taxes, which were $3.3 million less than estimated in February and are now $3.8 million less than estimated for the fiscal year.

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