DALLAS – Texas ended its 2016 fiscal year Aug. 31 with revenues coming in 1.3% below estimates, state Comptroller Glenn Hegar said Wednesday.
After money was set aside for the Economic Stabilization Fund, or "rainy day fund," and the State Highway Fund, net revenues came to $49.9 billion compared to the certification revenue estimate of $50.6 billion that was used to budget for the year.
Sales tax, the largest source of revenue, was $28.2 billion, 3.5% below the January projection of $29.3 billion.
With the energy sector in a deep slump, production taxes from oil fell 7.6% below projections, while taxes on natural gas were 33.6% short of expectations.
"Given the prolonged weakness in the oil and gas sector and the continued downward trend of sales taxes when compared year over year, we expected total tax collections to come in below estimates," Hegar said. "However, the current budget continues to work. Unlike other energy states, Texas doesn't need to make cuts to the current budget and will end the fiscal year with a substantial balance."
The state will set aside $879 million for transfer to the ESF and the SHF based on fiscal 2016 oil production tax collections.
Natural gas production tax collections did not meet the threshold for transfer, Hegar said. Each fund will receive $439.5 million. The transfer will bring the ESF to a record $10.1 billion.
The transfer amounts are based on whether oil production and natural gas production tax revenues exceed 1987 collections. If either tax is greater than the 1987 threshold, an amount equal to 75 percent of the excess is transferred.
"We finished fiscal 2016 with $651 million less for general purpose spending than we estimated in the CRE," Hegar said. "While that's a significant number, it's only 1.3% below estimate. Texas continues to grow, only at a more moderated pace."
Hegar also said that state sales tax revenue in August was $2.5 billion, down 2.6% compared to August 2015.
"The decline in state sales tax revenue was led by reduced collections from the oil and natural gas-related sectors, but collections from the retail trade and information sectors also were down compared to a year ago," Hegar said. "Increases continued to be seen from construction and restaurants."
Total sales tax revenue for the three months ending in August 2016 is down 1.7% compared to the same period a year ago. Sales tax revenue made up 58% of all tax collections in fiscal 2016. Motor vehicle sales and rental taxes, motor fuel taxes and oil and natural gas production taxes also are large revenue sources for the state.
For the month of August, motor vehicle sales and rental taxes rose 5.9% while motor fuel taxes were unchanged from the same month last year. Oil and gas production taxes were down 30% compared to August 2015, Hegar said.
