Comptroller Glenn Hegar said in the press release, “The slight decline in total sales tax revenue masks starkly contrasting results among economic sectors, with strong gains in collections from retail trade offset by continued deep declines in collections from recreational services and the oil- and gas-related sectors.”
Much of the sales taxes remitted come from transactions made the month previous to the remittance.
Hegar added, “Stay-at-home spending trends that emerged in response to the COVID-19 pandemic continued through the Christmas shopping season, with elevated receipts coming from online vendors, electronics and appliance stores, building materials and home furnishings stores, big box general merchandisers and sporting goods stores.”
Thus far through the 2020 to 2021 fiscal year, sales taxes are down 4.2 percent from the same period in the 2019 to 2020 fiscal year.
Total tax collections are down 7.6 percent from the same month last year with virtually every consumption tax category lagging significantly behind its previous year levels.
Oil and natural gas production taxes remain depressed, down 36 percent and 22 percent, respectively.
“While oil and gas well drilling activity has risen from lows reached earlier in the pandemic, the December active rotary rig count for Texas was still more than 60 percent lower than a year ago, depressing sales tax receipts from mining, construction, manufacturing and equipment rental and leasing businesses,” Hegar continued.
The service industry continues to limp along through the pandemic. Hegar stated, “Receipts from restaurants also remained below levels seen a year ago, while receipts from recreational services — such as live music venues, amusement parks, bowling centers and fitness clubs — remained severely depressed.”
The hotel occupancy and alcoholic beverage taxes are down 35 and 28 percent from their January 2020 levels.
Despite the tax collection woes, the state is still in the black on net revenue, thanks to $6 billion in federal income.
Initial blueprints for the state’s biennial budget have been announced — amounting to $251 billion in total with a $1 billion increase to the general revenue fund.
Due to the stark decrease in tax collections, Hegar originally projected a dire $4.6 billion budget shortfall. But as the year went on, collections improved, leading to an adjustment by Hegar to a $950 million shortfall.
The state’s finances are of paramount concern to the state legislature as it debates its one constitutional responsibility: pass a balanced budget.
In the months to come, Texas will see just how much it has improved as comparisons to the initial pandemic period will become available.
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Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.