AUSTIN (KXAN) — The state of Texas is projected to have $112.5 billion in revenue available for general-purpose spending during the 2022-23 period — which may sound like a lot, but represents an overall 0.4% decrease of available funds from the two previous years.
All-in-all, Texas’ ending 2020-21 balance will be close to negative $1 billion, according to Texas Comptroller Glenn Hegar’s Biennial Revenue Estimate, released on Monday. And Hegar’s office says it’s a direct result of the COVID-19 pandemic.
The estimate is formulated to help state lawmakers craft and balance the budget for the next two years — but the next budget will be trickier to craft, as the pandemic continues.
“The ultimate path of the pandemic and the behavior of consumers and businesses during a resurgence are difficult to gauge,” says Hegar. “It’s also unclear how they’ll respond once the pandemic is fully under control.”
The revenue forecast is wide open, the Comptroller reports. Consumer spending from here on out could either represent a recovery or even a further lapse.
Where will Texas’ revenue come from?
The state’s $112.5 billion in general spending will include collections from General Revenue-Related (GR-R) funds. These collections include things like housing taxes and vehicle-related taxes. Texas is expected to collect $119.6 billion in GR-R funds for 2022-23 — however, the revenue losses due to COVID-19 will be subtracted from this pot.
Texas’ revenue breakdown for 2022-23 is this:
- Sales tax collections — these are estimated to be Texas’ largest source of revenue for the next two years, about 62% of GR-R funds
- Other taxes — motor-vehicle taxes and various housing taxes, expected to bring in $10.1 billion
- Oil production taxes — $6.5 billion
- Natural gas taxes — $3.5 billion
- Franchise taxes — $6.3 billion
Revenues expected to be generated during 2022 and 2023 number around $270.5 billion.
Overall, Hegar says, it’s likely state revenues will get worse, then better.
“While there are numerous potential concerns,” Hegar says, “my economic forecast assumes a further moderate decline in economic activity in fiscal 2021, followed by a return to growth in the 2022-23 biennium at rates somewhat higher than those experienced during the last decade.”
The Texas Taxpayers and Research Association, a nonpartisan organization, reacted to the Comptroller’s estimate, calling it both good and bad news, and saying in part:
“The $1 billion deficit is substantially less than the $4.3 billion lawmakers faced in 2011… Texas’ current budget challenges can be addressed without raising taxes at a time when Texans can least afford it.”