TEA has analyzed the state’s April revenue figures. While revenue dropped 40 percent from April of last year and was $693.8 million less than budgeted, revenue figures left hope the state can finish out the fiscal year without going into reserves.
The biggest drop in General Fund revenue—$486.6 million—was in franchise and excise tax receipts, along with Hall income and business taxes. The drop was caused by extended filing deadlines that allows individuals and businesses to report taxable activity later in the year.
The state K-12 budget comes from the General Fund, and 60% of its revenue is generated by state sales tax. Sales tax revenues dropped 6 percent from April 2019, or $61.2 million less than the budget estimate.
As in recent years, Tennessee was running a General Fund surplus (a key TEA talking point) prior to the Covid-19 outbreak. Even with the economic slowdown Tennessee has collected $180 million more in state sales tax than budgeted by the end of April. If our state can get through the next three months of this fiscal year without tapping reserves, it will go a long way to protecting K-12 funding increases in the FY21 budget.
There is a $59 million increase in teacher salary funds, $66 million for BEP growth and $15 million for educator insurance premiums in the budget passed mid-March as the pandemic gripped the state.
There is also $41 million for the unconstitutional voucher program that must be the first thing to go if cuts to the state budget become necessary.
The General Assembly is slated to return to the capitol June 1, with the primary task to amend state budgets in light of new revenue data and estimates. Stay informed with TEA as we fight to keep adequate and necessary K-12 funding at the state and federal levels.