Taxes & SpendingTexas’ June Tax Revenues Down 14 Percent from 2019

After months facing a pandemic and the resulting government-mandated closures, Texas is suffering from tax revenue decreases that have put the state well behind projections.
July 1, 2020
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Texas’ fiscal bill of health is certainly not perfect, both due to its long-standing spending issues and the tax revenue depreciation caused by coronavirus’ consumer-habit changes and government closures.

But this month’s tax revenue report has both good and bad news to offer. While the total tax collection from last month is down 14 percent from June 2019, it is an improvement from May’s reported collections compared with last year, which showed a steep decrease of nearly 50 percent.

Sales tax collections, meanwhile, were down 6.5 percent, also an improvement from the previous month.

Other bright spots for the state include a 238 percent increase for franchise tax collections, utility taxes up 80 percent, and a two percent increase in net total revenue compared to a 22 percent drop last month.

It’s important to note that these collections totals are based on commerce from the previous month (i.e. consumer spending from May, in this case).

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Compared with original biennium projections, Texas’s actual revenue collections are down 18 percent.

Also, note that this is an imperfect estimate as the state does not create month-to-month revenue projections, just a lump sum. This means that this year’s collections are compared to a monthly average of the projection.

Comptroller Glenn Hegar said in a statement, “The decline in state sales tax collections was driven principally by steep drops in remittances from oil- and gas-related sectors. Collections from the construction and amusement service sectors were also sharply down.”

Texas’ oil and gas industry has recoiled after years of prosperity as travel, both by air and ground, waned immensely. While the price of oil is still about a third lower than it was before the pandemic, it has largely recovered from its drastic decrease in April.

Hegar further added, “While collections from restaurants also were depressed, the extent of the decline was checked by increased takeout and delivery sales. Retail trade receipts rose significantly, buoyed by increased online shopping and building material purchases, as business premises were modified for COVID-19 precautions.”

In May, Texas remained largely reopened. Now that Governor Abbott has closed portions of the economy once again, there will likely be a negative effect on the states tax revenues.

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Brad Johnson

Brad Johnson

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 watching and quoting Monty Python productions.

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