TENNESSEE REVENUE ESTIMATES TENNESSEE REVENUE ESTIMATES FISCAL YEARS FISCAL YEARS

2009-10 AND 2010-112009-10 AND 2010-11

Presentation to the State Funding Board

Fiscal Review Committee Staff

March 24, 2010

COMPARED TO COMPARED TO WHAT?WHAT?

3

Percent Change in Sales Tax Collections Percent Change in Sales Tax Collections to Percent Change in TN Employmentto Percent Change in TN Employment

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%A

ug

-07

De

c-0

7

Ap

r-0

8

Au

g-0

8

De

c-0

8

Ap

r-0

9

Au

g-0

9

De

c-0

9

Ap

r-1

0

% C

HA

NG

E IN

SA

LE

S T

AX

CO

LL

EC

TIO

NS

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

% C

HA

NG

E IN

TN

EM

PL

OY

ME

NT

4

Personal Savings Rate Personal Savings Rate Relative to Changes in Sales Tax CollectionsRelative to Changes in Sales Tax Collections

-12.00%

-9.00%

-6.00%

-3.00%

0.00%

3.00%

6.00%

9.00%

Jan

-07

Mar-

07

May-0

7

Ju

l-07

Sep

-07

No

v-0

7

Jan

-08

Mar-

08

May-0

8

Ju

l-08

Sep

-08

No

v-0

8

Jan

-09

Mar-

09

May-0

9

Ju

l-09

Sep

-09

No

v-0

9

Jan

-10

3 m

on

th M

A -

Perc

en

t C

han

ge i

n S

AL

ES

TA

X

CO

LL

EC

TIO

NS

(Y

ear-

over-

Year)

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

3 m

on

th M

A - P

ers

on

al S

avin

gs R

ate

3 Month Mov. Avg. (Personal Savings Rate)

3 Month Mov. Avg. (Sales Tax Collections Year Over Year % Change)

5

Changes in Stock Market Changes in Stock Market Relative to Changes in Sales Tax CollectionsRelative to Changes in Sales Tax Collections

-12.00%

-10.00%

-8.00%

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%Jan

-07

Mar-

07

May-0

7

Ju

l-07

Sep

-07

No

v-0

7

Jan

-08

Mar-

08

May-0

8

Ju

l-08

Sep

-08

No

v-0

8

Jan

-09

Mar-

09

May-0

9

Ju

l-09

Sep

-09

No

v-0

9

Jan

-10

%

CH

AN

GE

SA

LE

S T

AX

CO

LL

EC

TIO

NS

-50.00%

-40.00%

-30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

% C

HA

NG

E D

OW

DOW Year Over Year Change

3 Month Mov. Avg. (Sales Tax Collections Year Over Year % Change)

6

Base Analysis for Sales Tax Collections Base Analysis for Sales Tax Collections (Year-over-Year Percentage Changes)(Year-over-Year Percentage Changes)

FY07-08 FY08-09 FY09-10

2007 2008 2009

August 2.41% -1.27% 1.13% -8.21% -7.07%September 3.55% -3.42% 0.13% -9.41% -9.28%

October 1.84% -4.71% -2.87% -7.80% -10.67%November 4.41% -7.64% -3.23% -4.45% -7.68%December 4.67% -10.28% -5.61% -2.88% -8.49%

Month 2008 2009 2-Year Net Chg 2010 3-Year Net Chg

January -1.36% -6.87% -8.23% -1.86% -10.10%February -0.92% -7.88% -8.80% -6.67% -15.46% -9.82%

March 0.60% -8.94% -8.34% -2.61% -10.95%April -4.08% -9.94% -14.03% 2.41% -11.62%May 1.20% -11.00% -9.80% 0.40% -9.40%June -1.45% -9.41% -10.86% 1.98% -8.88%July -1.36% -10.88% -12.24% 1.47% -10.77% -10.32%

Percent Change in

Total Accrued Collections

0.52% -7.74% -7.22% -3.02% -10.24%

Percentages with yellow fill are estimates.Percentages in red font are negative.Percentages in black font are positive.

Three-Year Average

Change for first seven

months

Estimated Three-Year Average Change for

remaining five months

2-Year Net Chg 3-Year Net ChgMonth

7

Schedule Showing 2009-10 and 2010-2011 Schedule Showing 2009-10 and 2010-2011 Revenue Estimates for All Funds by Fiscal Review Staff Revenue Estimates for All Funds by Fiscal Review Staff

(ACCRUAL COLLECTIONS)(ACCRUAL COLLECTIONS)

1) Privilege tax collections are reduced by $10.7 million each year for the earmarked portion of the tax.

SCHEDULE 1

REVENUE SOURCEFRC STAFF ESTIMATES

FY09-10

% INC. (DEC.) OVER

FY08-09

FRC STAFF ESTIMATES

FY10-11

% INC. (DEC.) OVER

FY09-10

SALES & USE TAX $6,130,000,000 (3.0) $6,252,600,000 2.0GASOLINE TAX 614,000,000 2.0 623,210,000 1.5MOTOR FUEL TAX 151,500,000 (1.9) 155,288,000 2.5GASOLINE INSPECTION TAX 62,800,000 2.0 64,056,000 2.0MOTOR VEHICLE REG. TAX 242,000,000 1.3 249,260,000 3.0INCOME TAX 185,000,000 (16.1) 194,250,000 5.0

PRIVILEGE TAX 1)

225,000,000 (3.3) 229,500,000 2.0GROSS RECEIPTS TAX - TVA 317,909,000 11.5 321,088,000 1.0GROSS RECIPTS TAX-OTHER 22,500,000 (30.5) 23,625,000 5.0BEER TAX 17,500,000 (1.7) 17,938,000 2.5ALCOHOLIC BEVERAGE TAX 45,400,000 3.0 46,535,000 2.5FRANCHISE & EXCISE TAX 1,443,495,000 6.0 1,472,365,000 2.0INHERITANCE TAX 82,700,000 3.2 84,354,000 2.0TOBACCO TAX 290,000,000 (3.3) 290,000,000 -MOTOR VEHICLE TITLE FEES 10,000,000 2.0 10,250,000 2.5MIXED DRINK TAX 54,900,000 1.5 55,998,000 2.0BUSINESS TAX 153,300,000 13.5 157,899,000 3.0SEVERANCE TAX 2,200,000 3.3 2,266,000 3.0AMUSEMENT TAX 300,000 (15.1) 300,000 -UNAUTHORIZED SUBSTANCE TAX (2,000,000) NA - -

TOTALS - FRC STAFF EST. $10,048,504,000 (1.03) $10,250,782,000 2.01

F&A REVISED EST. FEB 2010 $10,120,000,000 $10,330,000,000

EST. OVERAGE (SHORTAGE) COMPARED WITH F&A EST. OF FEB 2010 ALL FUNDS ($71,496,000) ($79,218,000) GENERAL FUND ($59,592,000) ($68,832,000)

8

Schedule Showing Fiscal Review Staff Revenue Schedule Showing Fiscal Review Staff Revenue Estimates for All Funds and the General Fund for Estimates for All Funds and the General Fund for

Fiscal Year 2009-10Fiscal Year 2009-10SCHEDULE 2

REVENUE SOURCE ALL FUNDS GENERAL FUND

SALES & USE TAX $6,130,000,000 $5,784,881,000

GASOLINE TAX 614,000,000 10,192,000

MOTOR FUEL TAX 151,500,000 2,879,000

GASOLINE INSPECTION TAX 62,800,000 18,030,000

MOTOR VEHICLE REGISTRATION TAX 242,000,000 43,270,000

INCOME TAX 185,000,000 119,473,000

PRIVILEGE TAX 225,000,000 224,033,000

GROSS RECEIPTS TAX - TVA 317,909,000 178,400,000

GROSS RECEIPTS TAX - OTHER 22,500,000 19,700,000

BEER TAX 17,500,000 11,765,000

ALCOHOLIC BEVERAGE TAX 45,400,000 37,496,000

FRANCHISE & EXCISE TAX 1,443,495,000 1,182,695,000

INHERITANCE TAX 82,700,000 82,700,000

TOBACCO TAX 290,000,000 290,000,000

MOTOR VEHICLE TITLE FEES 10,000,000 7,300,000

MIXED DRINK TAX 54,900,000 27,450,000

BUSINESS TAX 153,300,000 153,300,000

SEVERANCE TAX 2,200,000 1,100,000

AMUSEMENT TAX 300,000 300,000

UNAUTHORIZED SUBSTANCE TAX (2,000,000) (556,000)

TOTAL $10,048,504,000 $8,194,408,000

GENERAL FUND DECREASE OVER ACTUAL FY08-09

($130,381,900)

9

Schedule Showing Fiscal Review Staff Comparison Schedule Showing Fiscal Review Staff Comparison of 2009-10 General Fund Estimatesof 2009-10 General Fund Estimates

SCHEDULE 3TAX

F&A FEB '10 ESTIMATES

FRC STAFF ESTIMATES

FRC OVERAGE (SHORTAGE)

SALES $5,857,500,000 $5,784,881,000 ($72,619,000)

GASOLINE 10,200,000 10,192,000 (8,000)

MOTOR FUEL 2,900,000 2,879,000 (21,000)

GAS INSPECTION 18,200,000 18,030,000 (170,000)

MOTOR VEHICLE REG 43,800,000 43,270,000 (530,000)

INCOME 122,700,000 119,473,000 (3,227,000)

PRIVILEGE 229,000,000 224,033,000 (4,967,000)

GROSS RECEIPTS - TVA 178,400,000 178,400,000 0

GROSS RECEIPTS - OTHER 19,700,000 19,700,000 0

BEER 11,900,000 11,765,000 (135,000)

ALCOHOLIC BEVERAGE 37,000,000 37,496,000 496,000

FRANCHISE & EXCISE 1,154,500,000 1,182,695,000 28,195,000

INHERITANCE 80,000,000 82,700,000 2,700,000

TOBACCO 300,000,000 290,000,000 (10,000,000)

MOTOR VEHICLE TITLE FEES 7,300,000 7,300,000 0

MIXED DRINK 26,700,000 27,450,000 750,000

BUSINESS 153,300,000 153,300,000 0

SEVERANCE 1,100,000 1,100,000 0

AMUSEMENT 300,000 300,000 0

UNAUTHORIZED SUBSTANCE (500,000) (556,000) (56,000)

TOTAL $8,254,000,000 $8,194,408,000 ($59,592,000)

FRC STAFF GEN FUND EST. COMPARED WITH FEB '10 EST:

SALES $5,857,500,000 $5,784,881,000 ($72,619,000)

FRANCHISE & EXCISE 1,154,500,000 1,182,695,000 28,195,000

ALL OTHER TAXES 1,242,000,000 1,226,832,000 (15,168,000)

TOTAL $8,254,000,000 $8,194,408,000 ($59,592,000)

10

Schedule Showing Fiscal Review Staff Revenue Schedule Showing Fiscal Review Staff Revenue Estimates for All Funds and the General Fund for Estimates for All Funds and the General Fund for

Fiscal Year 2010-2011Fiscal Year 2010-2011SCHEDULE 4

REVENUE SOURCEALL FUNDS

FY10-11GENERAL FUND

FY10-11

SALES & USE TAX $6,252,600,000 $5,901,829,000

GASOLINE TAX 623,210,000 10,283,000

MOTOR FUEL TAX 155,288,000 2,966,000

GASOLINE INSPECTION TAX 64,056,000 18,512,000

MOTOR VEHICLE REGISTRATION TAX 249,260,000 44,443,000

INCOME TAX 194,250,000 125,408,000

PRIVILEGE TAX 229,500,000 228,490,000

GROSS RECEIPTS TAX - TVA 321,088,000 180,000,000

GROSS RECEIPTS TAX - OTHER 23,625,000 20,622,000

BEER TAX 17,938,000 11,992,000

ALCOHOLIC BEVERAGE TAX 46,535,000 38,424,000

FRANCHISE & EXCISE TAX 1,472,365,000 1,219,065,000

INHERITANCE TAX 84,354,000 84,354,000

TOBACCO TAX 290,000,000 290,000,000

MOTOR VEHICLE TITLE FEES 10,250,000 7,550,000

MIXED DRINK TAX 55,998,000 27,949,000

BUSINESS TAX 157,899,000 157,899,000

SEVERANCE TAX 2,266,000 1,182,000

AMUSEMENT TAX 300,000 300,000

UNAUTHORIZED SUBSTANCE TAX - -

TOTAL $10,250,782,000 $8,371,268,000

GENERAL FUND INCREASE OVER ESTIMATED FY09-10

$176,860,000

11

Comparison of 2010-11 General Fund EstimatesComparison of 2010-11 General Fund Estimates

TAXF&A FEB '10 ESTIMATES

FRC STAFF ESTIMATES

FRC OVERAGE (SHORTAGE)

SALES $5,946,500,000 $5,901,829,000 ($44,671,000)

GASOLINE 10,300,000 10,283,000 (17,000)

MOTOR FUEL 3,000,000 2,966,000 (34,000)

GAS INSPECTION 18,700,000 18,512,000 (188,000)

MOTOR VEHICLE REG 45,000,000 44,443,000 (557,000)

INCOME 128,800,000 125,408,000 (3,392,000)

PRIVILEGE 225,000,000 228,490,000 3,490,000

GROSS RECEIPTS - TVA 180,000,000 180,000,000 -

GROSS RECEIPTS - OTHER 20,600,000 20,622,000 22,000

BEER 12,100,000 11,992,000 (108,000)

ALCOHOLIC BEVERAGE 37,900,000 38,424,000 524,000

FRANCHISE & EXCISE 1,234,100,000 1,219,065,000 (15,035,000)

INHERITANCE 82,400,000 84,354,000 1,954,000

TOBACCO 301,500,000 290,000,000 (11,500,000)

MOTOR VEHICLE TITLE FEES 7,600,000 7,550,000 (50,000)

MIXED DRINK 27,200,000 27,949,000 749,000

BUSINESS 157,900,000 157,899,000 (1,000)

SEVERANCE 1,200,000 1,182,000 (18,000)

AMUSEMENT 300,000 300,000 ▬

UNAUTHORIZED SUBSTANCE ▬ ▬ ▬

TOTAL $8,440,100,000 $8,371,268,000 ($68,832,000)

SCHEDULE 5

TENNESSEE REVENUE ESTIMATES TENNESSEE REVENUE ESTIMATES FISCAL YEARS FISCAL YEARS

2009-10 AND 2010-112009-10 AND 2010-11

Presentation to the State Funding Board

Fiscal Review Committee Staff

March 24, 2010