AUSTIN (Talk1370.com) -- Ahead of Tuesday's opening of the 87th Texas Legislature, Texas Comptroller Glenn Hegar on Monday said the amount of state revenues lawmakers can spend is likely to be down less than one percent due to COVID-19.
Hegar's biennial revenue estimate forecasts that lawmakers will have $112.5 billion in revenues available for general purpose spending for the 2022-23 biennium - a 0.4 percent drop in the revenues that were available for the 2020-21 biennium. The dip comes in the wake of the pandemic, which Hegar says will leave lawmakers needing to address a nearly $1 billion shortfall from the 2020-21 budget.
Back in July, Hegar had estimated the state would see a $4.6 billion shortfall.
"As is always the case, this estimate is based on the most recent and precise information we have available," Hegar said. "It represents our efforts to provide lawmakers with the most accurate forecast possible as they craft the budget for the 2022-23 biennium and the supplemental spending bill to address the remainder of the current biennium."
Overall, Hegar said the state expects to collect $119.6 billion in General Revenue funds, which will be offset by the negative $946 million 2020-21 fund balance, as well as $5.8 billion that has to be reserved for the state's rainy day fund and highway fund, and a $271 million shortfall in the state's prepaid college tuition plan.
Sales tax collections make up about 62 percent of the general revenue forecast, an increase of 5.1 percent from the 2020-21 biennium, reaching $64.1 billion for the 2022-23 biennium. Other significant sources of general fund revenues in the 2022-23 forecast include:
- Motor vehicle-related taxes, including sales, rental and manufactured housing taxes, which are expected to reach $10.1 billion, up 5.1 percent
- Oil production tax collections, which are projected to generate $6.5 billion, up 10.1 percent
- Natural gas tax collections, which are expected to raise $3.5 billion, up 66.9 percent
- Franchise tax collections, which are projected to generate $6.3 billion, up 5.1 percent
- For all funds, franchise tax revenue is estimated to generate $9 billion, up 4.4 percent
State revenue from all sources and for all purposes is expected to reach $270.5 billion for the 2022-23 biennium, including about $98.2 billion in federal receipts, along with other income and revenues dedicated for specific purposes.
"The forecast, however, remains clouded with uncertainty," Hegar said. "The ultimate path of the pandemic and the behavior of consumers and businesses during a resurgence are difficult to gauge. It’s also unclear how they’ll respond once the pandemic is fully under control. As a result, there is a wide range of possible outcomes for state revenue through the end of fiscal 2023, with the possibility of revenue falling short of this forecast but also a chance revenue could exceed it, perhaps substantially."
Hegar's forecast puts the state's Rainy Day Fund at about $11.6 billion at the end of the 2022-23 biennium, barring any legislative appropriations. Right now, the fund has some $10.5 billion available.
"In any case, the Legislature will again face some difficult choices to balance the budget," Hegar said. "While savings from agency spending cuts and federal funding could help erase the projected shortfall for this biennium, a substantial supplemental appropriations bill could increase it, thereby reducing revenue available for the next biennium."
Hegar's forecast does not include any spending reductions from Gov. Greg Abbott's directive to state agencies to cut 5 percent of their spending at the onset of the COVID-19 pandemic.
"We must keep an eye on several things that could impact this forecast, including the spread of the COVID-19 virus and the possibility of renewed reduction in customer-facing economic activity," Hegar said. "In addition, we must carefully monitor the nascent recovery in energy markets as further shocks on either the demand or supply side could threaten recent positive developments for prices and production."
More information on the biennial revenue estimate is available on the Comptroller's website.
