Texas Comptroller Glenn Hegar Monday updated the State's Legislative Budget Board (LBB) on the financial condition of this state. "Uncertainty is one word that I use very frequently," Hegar told State House Speaker Dennis Bonnen, Lt. Governor Dan Patrick and the other members of the LBB. "And as there remains a great deal of uncertainty about future economic outlook here in Texas, the United States, and obviously worldwide."
The uncertainty is based on the continued struggles of the state's biggest industries. "Some sources of revenue, hotel occupancy taxes, and alcohol beverage taxes, for example, continue to show steep declines relative to a year ago, due to a sharp, sharp drop in travel and reduced businesses at restaurants and bars." Hegar added that oil and natural gas production taxes also remain "well below levels from a year ago, mostly the result of lower prices."
Hegar did have some optimistic news for the LBB. The one bright spot has been tax revenues from online sales. "The biggest gain has come in form of collections from online retail," said Hegar. "This is particularly attributed to the shift in online shopping during the pandemic, but it's also because we are now collecting a lot of revenue that we were not collecting in fiscal 2019." According to Hegar, in fiscal year 2020 online marketplaces like Amazon, eBay and Etsy helped generate tax revenue for the state totaling $1.25 billion.
July was the one month that sales tax revenues actually went up relative to last year, according to Hegar. "This is reflected with a boost in sales taxes that occurred in the economic activity of June, probably assisted by a spike in personal income attributed to federal government assistance in the form of things like stimulus checks, enhanced unemployment benefits and the paycheck protection program."
Despite his earlier call that the outlook of the economy was uncertain, Hegar painted a dark picture of the situation. "Overall in the second half of fiscal year 2020 sales taxes fell by 4.8% relative to a year ago while many other revenue sources exhibited double digit declines over that time."
