Texas Comptroller reports 9.3% drop in sales tax revenue. Next month could be worse

Coronavirus

AUSTIN (KXAN) — State sales tax revenue totaled $2.58 billion in April, according to a statement from Texas Comptroller Glenn Hegar, a 9.3% decrease from April 2019 marking the steepest decline since January 2010.

Hegar says Aprils $2.59 billion is mostly comprised of sales made in March, but were remitted to the agency in April. The impact of social distancing requirements, which were not widespread until late March, affected only a portion of the sales tax remittances in April.

“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.”

According to Hegar, sales tax is the largest source of state funding for the state budget. It makes up 57% of all of Texas’ tax collection.

Compared to the sales tax decline from the 2008 financial crisis, the effect on sale tax during the current economic crisis has been more immediate.

“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.”

The following revenue for Texas coming from other major taxes more evidently show the effects of the March economic slowdown:

  • Motor vehicle sales and rental taxes — $164 million, down 45% from April 2019
  • Motor fuel taxes — $284 million, down 12% from April 2019
  • Natural gas production tax — $67 million, down 48% from April 2019
  • Oil production tax — $191 million, down 45% from April 2019
  • Hotel occupancy tax — $24 million, down 63% from April 2019
  • Alcoholic beverage taxes — $57 million, down 55% from April 2019

More information on monthly collections can be found at the Comptroller’s Monthly State Revenue Watch.

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