AUSTIN (Talk1370.com) -- Texas' sales tax revenue in April was down 9.3 percent compared to last year, in a sign of the coronavirus' impact on sales tax collections - the largest source of funding for the Texas state budget.
Collections for the month totaled $2.58 billion. According to State Comptroller Glenn Hegar, it's the steepest year-to-year decline since January 2010.
"State sales tax collections declined as a result of efforts to stem the spread of COVID-19 through business closures, crowd limits and stay-at-home orders adopted in the state, as well as a precipitous drop in worldwide demand for oil,” Hegar said. “The steepest declines in tax remittances were from businesses most quickly and dramatically affected by social distancing: restaurants, performing arts venues, movie theaters, theme parks and fitness centers, as well as department stores and boutique retail shops. However, those losses were, to a degree, offset by increases from big-box retailers, grocery stores and online vendors. Remittances from oil- and gas-related sectors also fell significantly as oil and gas exploration and production companies slashed capital spending in response to the crash in oil price."
Hegar says May's collections, based on April sales, will likely see the full impact of social distancing and stay at home requirements, which were not widespread across the state until late March.
Sales tax is the largest source of state funding for the state budget, accounting for 57 percent of all tax collections. It can also be a lagging indicator of economic slowdowns. The recession associated with the financial crisis more than a decade ago began in December 2007 and lasted 18 months, but Texas did not see significant sales tax declines until early 2009. While the effect on sales taxes from the current economic contraction has been more immediate, the impact of rising unemployment and contracting economic activity in many parts of the state’s economy, including oil and natural gas exploration and production, likely will act as a drag on sales tax revenue for many months.