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State-Shared Taxes and Appropriations for the Coming Fiscal Year

Reference Number: MTAS-545
Tennessee Code Annotated
Reviewed Date: June 25, 2020
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The Tennessee Department of Revenue makes payments of state-shared revenues to all Tennessee municipalities based on population. MTAS tracks the monthly revenues reported by the Department of Revenue and uses those along with estimates to forecast what cities may expect to receive in the coming fiscal year.

The estimates shown below include actual numbers through May of 2020.  The effects of the COVID-19 virus on the economy are not fully known at this time, so the reader should use sound judgement and caution when budgeting for 2020-21.  State and federal grants will help offset the effect of COVID-19 but will be restricted in use. We will continue to monitor state collections and update this publication regularly.  Most economic experts expect a significant drop in revenues for the majority of calendar year of 2020, with revenue growth in the first half of the 2020-21 calendar year. 

The first column in the chart below shows an updated estimate for the 2019-20 fiscal year ($139.47). The second column takes what is estimated through June, uses available market data for 2020-21 and makes a conservative estimate of state-shared revenues for the 2020-21 fiscal year ($135.47). This estimate is preliminary, especially since the economic impact of COVID-19 is not fully known. This is to be used as a tool in estimating projected revenue for the 2020-21 fiscal year. It is but one tool, and a multi-year trend analysis should also be prepared to assist in determining the appropriate estimate for the FY 2020-21 budget.

NOTE** The IMPROVE Act of 2017 provided for additional gas and motor taxes. For FY 2019-20 the Act provided for an additional 1 cent of gas tax and 3 cents of diesel tax. Through March 2020 state sales tax shows a state-wide increase of 5.41% percent over the prior year. State beer tax, the special petroleum tax and the TVA in-lieu-of tax remain essentially unchanged. Gasoline and motor fuel taxes have increased 6.53% percent over the prior year due primarily to the IMPROVE Act. MTAS will review monthly actual revenue and will update the estimate if it changes significantly.

  Updated Estimate 2019-2020 Initial Estimate 2020- 2021
General Fund Per Capita Amount Per Capita Amount
State Sales Tax $90.00 $86.00
State Beer Tax .48 .48

Special Petroleum Products Tax
(City Streets and Transportation Revenue)

1.99 1.99
Gross Receipts Tax
(TVA in lieu of taxes)
12.00 12.00
Total General Fund Revenue $104.47 $100.47
     
State Street Aid Funds    
Gasoline and Motor Fuel Taxes $35.00 $35.00
     
Total Per Capita (General and State Street Aid Funds) $139.47 $135.47