As the state’s budget year nears an end, tax collections are nearly $289.9 million in the hole following another month of revenues falling below expectations.
Revenues collected by the state for the last 11 months have largely come in below budget, leaving state government with a weak financial tax base struggling largely from an unexpected drop in business taxes.
“June collections recorded stronger than anticipated sales tax growth, but continued to reflect weaker than anticipated collections from the corporate sector,” state Finance and Administration Commissioner Larry Martin (pictured) said in a statement Friday. “We continue to believe the recent up-tick in retail activity is an indication of renewed consumer confidence, and an economy slowly on the mend.”
Sales taxes posted a $13.5 million gain in June, a figure that is 2.2 percent more than the state budgeted. Sales taxes make up the bulk of the state’s revenue used to support state departments and services. While sales tax collections are up nearly 3.6 percent year-to-date, sales taxes hover $15.5 million below expectations for the budget year.
But the big drop throughout the year has come from the state’s franchise and excise tax collections, which combined fell $54 million short of expectations last month, 14 percent below budget. Year-to-date, the state collections are $278 million less than expected.
Tax collections on tobacco, motor vehicle title and registration, business, inheritance and estate, privilege, gross receipts, severance taxes and alcoholic beverages all fell short of expectations in June, according to the state.
Taxes on income, gasoline, mixed drinks, motor vehicle fuel and coin-operated amusement were up in the last month, with marginal increases in tax collections on purchases of beer and petroleum.
In total, the state collected $5.3 million more last June than it did last month.
Year to date, the state has collected .1 percent more than it did last year, but leaving state coffers collectively below budgeted estimates by $289.9 million, or 2.6 percent.
Halfway through the state’s budget year Tennessee’s revenue collections are $222.7 million in the hole, the Department of Revenue reported Thursday.
Although the department says January has seen the largest growth in tax collections over the last 13 months, revenues fell short $51.6 million from the state’s expectations.
Tax collections for the state have struggled all this budget year, raking in more money for the state than last year but consistently falling short of projections the state built its last budget on.
Sales taxes were up $6.3 percent above expectations in January, reflecting holiday shopping from the year before.
But corporate tax collections remained in a slump, collecting $49 million less than expected in January. Officials have blamed the consistent drop on businesses over paying their taxes in the beginning of 2013 then compensating for the overage since then. In the last six months, franchise and excise taxes are under collected by $207 million, according to the department.
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