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Tennessee February tax collections fall $60M short of budget

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(The Center Square) – Tennessee missed its budgeted estimates for tax collections by nearly $60 million in February.

The $1.3 billion was slightly less than February 2023.

Through seven months of the fiscal year, the state is now $437.6 million less than the budgeted estimates. The January totals were $86 million less than budgeted.

Tennessee’s State Funding Board adjusted the numbers based on collections falling consistently short of the budgeted totals this fiscal year. The estimates being used for next year’s budget are adjusted down $718.8 million from original estimates to flat year-over-year and estimate next year’s collections to be a 0.5% increase from this year.

The largest figure in Tennessee tax collections is sales tax, which was $43.9 million less than estimates in February and is $115.9 million less than estimated for the first seven months of the fiscal year.

“State tax revenues for the month of February were only slightly less than reported revenues from this same time last year despite significant environmental challenges,” said Tennessee Department of Finance and Administration Commissioner Jim Bryson. “Sales tax collections, reflecting January consumer activity, were negatively impacted by a week-long severe winter weather event that curtailed both spending and transportation. Conversely, franchise and excise tax revenues, and privilege tax receipts, both showed signs of increased growth for the first time this year.”

Franchise and excise taxes were $1.5 million less than estimated in February and are $235.7 million off the pace for the fiscal year.

Business taxes were $2 million more than estimated in February and are $3.2 million less for the fiscal year.

“Despite February revenue numbers being below our budgeted estimates, we are encouraged by some of the positive signs we are witnessing,” Bryson said. “Nonetheless, it remains important for us to maintain close controls on state spending and carefully monitor continuing revenue trends.”