State Revenue Report Notes Interesting Business & Economic Trends
Earlier this week, the Tennessee Department of Revenue (DOR) released its highly anticipated state monthly tax collection report for April 2020. The business community and legislators have been anxiously awaiting this information to see precisely how bad economic activity has declined to impact state tax revenue collections. The April report reflects actual activity from March the prior month. April usually is one of the largest collection months for the state and is the 9th month of the state's fiscal year.
April tax receipts were down a whopping $693 million from the prior year. But a closer look at the numbers does show there is some underlying stability. Franchise and Excise taxes makeup approximately $450 million of these but are not reflective of actual activity since a significant number of taxpayers likely are utilizing the extended filing date from April 15th to July 15th. Sales and Use taxes, which make up the most considerable component of Tennessee's tax base, were down only 6%. It is important to note that in the first half of March, Tennessee's economic engine was running full steam as Governor Lee's stay at home order was issued on March 12th and March 15th.
A closer look at the data reveals some interesting and not entirely surprising trends in our new economic world order. Sales and use collections increased in the following sectors: grocery 28%, liquor store sales 20%, drug stores 15%, and catalog and internet sales up a whopping 62% from the prior year. Sales and use collections decreased in the following sectors: Food and Restaurants 30%, Accommodations / Hotels, etc. 52%, Amusement taxes 45%, and furniture and automotive sales 15%. Local government sales and use collections were not hit as hard and only dropped .8% from the prior year; this smaller decline likely is attributed to grocery sales policy changes and lower automotive sales.