(AUSTIN) — Texas Comptroller Glenn Hegar today released totals for fiscal 2016 state revenues, in addition to announcing monthly state revenues for August.
Net income available for general purpose spending after severance tax revenues are set aside for transfer to the Economic Stabilization Fund (ESF) and the State Highway Fund (SHF) was $49.9 billion, 1.3 percent below the Certification Revenue Estimate (CRE) projection of $50.6 billion.
Sales tax revenue for the year was $28.2 billion, 3.5 percent below the CRE projection of $29.3 billion.
Oil production and regulation tax revenue were $1.7 billion, 7.6 percent below the CRE projection of $1.8 billion, while natural gas tax revenue was $579 million, 33.6 percent below the CRE projection of $871 million.
Franchise tax revenue was $3.9 billion. While this source of income was down 16.6 percent compared to fiscal 2015 as a result of tax rate reduction, it finished 10 percent ahead of the CRE estimate of $3.5 billion.
“Given the prolonged weakness in the oil and gas sector and the continued downward trend of sales taxes when compared year over year, we expected total tax collections to come in below estimates,” Hegar said. “However, the current budget continues to work. Unlike other energy states, Texas doesn’t need to make cuts to the current budget and will end the fiscal year with a substantial balance.”
The state will set aside $879 million for transfer to the ESF and the SHF based on fiscal 2016 oil production tax collections. Natural gas production tax collections did not meet the threshold for assignment. Each fund will receive $439.5 million. The transfer will bring the ESF to $10.1 billion, a record high.
Based on whether oil production and natural gas production tax revenues exceed 1987 collections determines transfer amounts. The transfer occurs if the excess is greater than the 1987 threshold, an amount equal to 75 percent.
“We finished fiscal 2016 with $651 million less for general purpose spending than we estimated in the CRE,” Hegar said. “While that’s a significant number, it’s only 1.3 percent below the estimate. Texas continues to grow, only at a more moderated pace.”
Hegar also said today that state sales tax revenue in August was $2.5 billion, down 2.6 percent compared to August 2015.
“Reduced collections from the oil and natural gas-related sectors determine the state tax revenue, but Collections from the retail trade and information sectors also were down compared to a year ago,” Hegar said. “Increases continued to be seen from construction and restaurants.”
Total sales tax revenue for the three months ending in August 2016 is down 1.7 percent compared to the same period a year ago. Sales tax revenue is the largest source of state funding for the state budget, accounting for 58 percent of all tax collections in fiscal 2016. Motor vehicle sales and rental taxes, motor fuel taxes and oil and natural gas production taxes also are significant revenue sources for the state.
In August 2016, Texas collected the following revenue from those taxes:
motor vehicle sales and rental taxes — $451 million, up 5.9 percent from August 2015;
motor fuel taxes — $306.7 million, unchanged from August 2015; and
oil and natural gas production taxes — $211.3 million, down 30 percent from August 2015.
For details on all monthly collections, visit the Comptroller’s Monthly State Revenue Watch.