DALLAS – September Texas sales tax revenue was down 3.9% year-over-year to $2.13 billion, the lowest total for the month since 2013, Comptroller Glenn Hegar reported Wednesday.
The September collections were the lowest for the calendar year and represented the fifth straight year-over-year monthly decline.
"Subdued spending for oil and gas drilling continues to depress sales tax revenue," Hegar said. "Consumer spending also appears to have slowed, as sales tax collections from retail trade were down from the previous year. In contrast, construction sector receipts continued to grow."
Total sales tax revenue for the three months ending in September 2016 is down 2.6% compared to the same period a year ago.
Sales tax revenue is the largest source of state funding for the state budget, accounting for 58% of all tax collections. Motor vehicle sales and rental taxes, motor fuel taxes and oil and natural gas production taxes also are large revenue sources for the state.
By category, motor vehicle sales and rental taxes were down 4.8% to $395.8 million. Motor fuel taxes were down 4.6% to $294 million, despite lower fuel prices that are usually expected to encourage more driving.
Oil and natural gas production taxes, a barometer for the state's energy economy, were down 6.2% compared to September 2015 to $215.9 million.
Despite the downturn in oil and gas markets and subsequent reduction in revenue, Texas retains triple-A ratings from four ratings agencies. Outlooks remain stable, as the state's economic diversification and nearly $10 billion rainy day fund shelters it from the kind of shocks that happened in previous energy downturns. The rainy day fund was created after the 1986 oil market collapse that had a devastating effect on Texas banks and real estate values.
Texas ended its 2016 fiscal year Aug. 31 with revenues coming in 1.3% below estimates, Hegar reported last month.
After money was set aside for the 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 totaled $28.2 billion for the fiscal year, 3.5% below the January projection of $29.3 billion.
