State tax revenues are being hit hard by the coronavirus, but the worst could be yet to come.
New numbers from the state show revenue is down nearly 40% for April compared to last year and falls more than $690 million short of what the state budgeted. But those April numbers reflect consumer activity in the month of March, when coronavirus hadn’t fully shuttered the economy — meaning the state will likely see even steeper declines in next month’s numbers.
The hardest-hit category in April was the franchise and excise tax, which is based on a business’s personal property and net earnings or income for the year. That came in at $486 million under what the state had budgeted for the month.
In all, the state collected about $1.3 billion in tax earnings compared to its projected revenue of nearly $2 billion.
The Tennessee Department of Finance and Administration says it’s been 10 years since revenues have been impacted by an economic downturn.
“The state’s large monthly revenue surpluses built up throughout the beginning of the year will now be tested as the pandemic’s impact begins to erase those gains,” finance commissioner Butch Eley says in a statement. “Yet we remain committed to keeping the state’s budget in balance despite the current challenges.”
The General Assembly passed a scaled-back budget at the end of March in anticipation of losses related to the pandemic. Legislative leaders say they expect to make even more cuts when they reconvene next month.