January 7, 2019
The Texas legislature has $119.1 billion to work with for general budgeting purposes during the 2020-21 budget season, a significant portion of which came from oil and natural gas tax income.
That’s the gist of Comptroller Glenn Hegar‘s traditional Biennial Revenue Estimate message Monday as the state legislature prepares to begin the 2019 session tomorrow.
The $119 billion figure is up 8.1% more than the money available to the last legislature for the 2018-19 biennium.
And that figure includes collections for 2020-2021 of $121.5 billion in General Revenue-Related funds as well as $4.2 billion in balances from the 2018-19 biennium.
State revenue from all sources and for all purposes is expected to reach $265.6 billion for the 2020-21 biennium, including approximately $88.7 billion in federal receipts.
Sales taxes are the state’s largest income source at 55%, which the comptroller projects will increase nearly 10% over the 2019-2020 period.
And despite the attractive figure, Hegar warned of “difficult choices” that could make balancing the state budget a troublesome process for senators and representatives.
The most pressing and costly budget drivers for the upcoming session include a potentially large boost in education spending to reduce the property tax burden and reform school finance.”
Hegar has also been warning of the difficulty in projecting how much money will be coming in over the next couple of years because of volatility in the oil and gas markets.
“For the 2020-21 biennium, we remain cautiously optimistic but recognize we’re unlikely to see continued revenue growth at the unusually strong rates we’ve seen in recent months,” Hegar said.
“Oil prices have dropped sharply since October, financial markets have demonstrated increased volatility, interest rates have been rising and U.S. trade policy remains uncertain.”
There are also tariffs and related international negotiations to keep in mind.
“And as the nation’s leading export state, the Texas economy in particular is exposed to potential reductions in international trade.”
Oil production tax collections are projected to generate $7.4 billion, up 11.1% from 2018-19, and natural gas tax collections are expected to raise $3.3 billion for the state, up 9.6 percent.
Vehicle-related taxes — including sales, rental and manufactured housing taxes — are expected to bring in $9.8 billion, up 0.4 percent from 2018-19.
“State revenue from all sources and for all purposes is expected to reach $265.6 billion for the 2020-21 biennium, including approximately $88.7 billion in federal receipts, along with other income and revenues dedicated for specific purposes and therefore unavailable for general-purpose spending,” Hegar’s office said.
Hegar also said he expects $6.3 billion from oil and natural gas taxes for 2020-21 transfers to the Economic Stabilization Fund (ESF) and the State Highway Fund (SHF).
None of this includes the Economic Stabilization Fund — the “Rainy Day Fund” — which legislators may tap in order to reform school funding while at the same time reducing property taxes, two of the most pressing matters to be faced by the legislature.