Tennessee Tax Revenue Tracker: May 2018
Each month, the Tennessee Department of Finance & Administration (F&A) reports how much tax revenue the state collected for the previous month. These reports help policymakers and the public understand how actual revenue collections compare to estimates from the start of the fiscal year. The Sycamore Institute’s Tennessee Tax Revenue Tracker provides a quick visual snapshot of each monthly report.
Tennessee’s May 2018 Revenue Collections
The image below shows Tennessee’s revenue collections so far in FY 2017-2018 relative to the estimates for which the state “budgeted” at the start of the fiscal year. As of May 31, 2018, Tennessee had collected about 84% of its total budgeted revenue for the current fiscal year. Actual collections were about 3% higher than estimated. For additional details, read F&A’s official May 2018 report on revenue collections.
Why Revenue Forecasts Are So Important
Forecasting how much tax revenue Tennessee will collect in a given year or month is a difficult but important part of maintaining a balanced budget, which the state constitution requires. F&A’s revenue forecasts have a major influence on decisions about spending. Overestimating revenues could force state policymakers to cut spending mid-year. On the other hand, underestimating revenues creates unplanned surpluses which can be spent the following year or saved in the rainy day fund. The trade-off of a surplus is that policymakers may have preferred to either spend the money or reduce taxes in the current year.
See our Tennessee State Budget Primer for more on the implications of state revenue estimates and how accurate these estimates have been in recent years. To learn how F&A creates its revenue forecasts, read the department’s methodology here.