AUSTIN (Talk1370.com) -- Texas Comptroller Glenn Hegar released his revised projections for the state's finances Monday, projecting a shortfall of $4.58 billion for fiscal year 2020-21.
The shortfall, which Hegar attributed to the COVID-19 pandemic and recent volatility in oil prices, is down from the original projection of a $2.89 billion surplus.
"The economic contraction associated with COVID-19 has resulted in revenue collections this fiscal year that are much lower than our earlier CRE projections," Hegar said. "It’s important to note that this revised estimate carries unprecedented uncertainty. We’re assuming the state will effectively manage the outbreak and that infection rates won’t overwhelm our health care system. This estimate also assumes that restrictions on businesses and individuals will be lifted before the end of this calendar year and that economic activity will strengthen but not return to pre-pandemic levels by the end of this biennium."
Hegar's projections indicate the state will have $110.19 billion in funds available for general purpose spending during the 2020-21 biennium, down from a projected $121.76 billion last October. That projection does not include the imapct of a request to state agencies to reduce their spending by 5 percent. The projections could also be affected by any further assistance from the federal government.
Texas sales tax revenues, which are the largest source of tax revenue, have held up better than other collections but have still fallen significantly. Hegar says fiscal 2020 revenues are expected to finish about 1 percent below fiscal 2019, with a drop of more than 4 percent in fiscal 2021.
Hegar's projection for the state's Economic Stabilization Fund, better known as the "Rainy Day Fund", shows an ending balance of $8.79 billion.
"In the coming months, some economic indicators will establish new records for rates of growth, but those records will be on the back of this year’s unprecedented declines," Hegar said. "The rebound will leave many measures of economic health below pre-pandemic levels. Consumers and businesses must be confident the virus is controlled before economic output, employment and revenues return to pre-pandemic levels."
More details are available on the Comptroller's website.