AUSTIN: Texas’ fiscal picture is nearly $1 billion worse than state Comptroller Glenn Hegar predicted last year when he lowered his revenue projection, thanks largely to the faltering oil and gas industry.
“Overall, it continues to be a drag on the overall state economy and the overall receipts into the state treasury,” Hegar said in an interview with the San Antonio Express-News, noting that effects of the oil and gas industry’s struggles ripple beyond areas where the energy business is concentrated. “We’re continuing to grow as a state, but just much more modestly than we and others would have predicted, because it’s had a much greater drag than many would have anticipated,” Hegar said.
The state still has enough money to support the current two-year state budget, which passed its halfway point when the state closed the books on the 2016 fiscal year Aug. 31, Hegar said. That’s because lawmakers last year left several billion dollars unspent when they crafted the spending plan.
The savings proved fortuitous when Hegar revised his revenue estimate last October, predicting that tax collections over the two-year budget period would be $4.6 billion less than his original forecast at the start of 2015. But tax receipts and other revenues combined in fiscal year 2016 fell $960 million more than even that revised estimate, Hegar said.
That total reflects tax collections that were $1.6 billion less than anticipated – such as sales and oil and gas tax revenues – offset by higher-than-expected income in areas including the lottery and vendor drug rebates to the state. The state also will benefit from the performance of the franchise tax, which is bringing in more revenue than anticipated. The overall lagging revenues put another dent in money available for transportation under a constitutional amendment that dedicated a portion of oil and gas tax revenue to that purpose, slashing it by $155 million.
There’s also a $155 million reduction in money that goes to fattening the state’s rainy day fund, also fueled by severance taxes. That fund will reach a record high of $10.1 billion this year. The remaining $651 million is a dip in money that is available to support general spending. While a small portion of the overall budget, the reduction comes as state budget writers already face a host of demands as they look toward the regular legislative session that begins in January.
