DALLAS – Texas ended the year on a positive note, with December sales tax revenues rising 4.9% over the same month in 2015, state Comptroller Glenn Hegar reported.
"Sales tax revenue growth was led by collections from sectors driven by consumer spending – retail trade and information services," Hegar said in the monthly report released Wednesday.
With December's $2.44 billion, Texas ended the calendar year with a total of $28.22 billion, down about 1.3% compared to 2015's total of $28.59 billion.
Total sales tax revenue for the three months ending in December was up by 0.6% compared with the same period a year ago. Sales tax revenue is the largest source of funding for the state budget, accounting for 58% of all tax collections. Texas does not levy an income tax.
Statewide sales tax revenues have been down in eight of the last 12 months as oil and gas prices remained about 50% below their mid-2014 peak. Despite the positive economic signs in the December figures, Hegar noted that oil and gas production remains a drag. The state collected $228.5 million in oil and gas production taxes in December, down 4.4% from December 2015.
While the auto industry nationwide is on pace for a record year, Texas recorded a 1.3% drop in motor vehicle sales and rental taxes for December at $357 million.
Taxes on motor fuels, by contrast, rose 7.5% to $289.5 million.
With the Texas Legislature coming into session this month, Hegar is preparing to certify revenue estimates for the next two fiscal years.
The Biennial Revenue Estimate forms the basis of each successive state budget. Legislators are not allowed to exceed the amount predicted to be available in the BRE.
Economist Ray Perryman, founder of the Perryman Group, said the state has weathered the downturn in oil and gas remarkably well.
"The resilience of the Texas economy with the end of the oil surge has surprised many, and prospects for continued expansion are encouraging," Perryman said in a report issued Wednesday.
For the first 11 months of 2016, the state added 164,000 jobs, exceeding 2015's pace of 140,400 new jobs over the same period. In September, Texas experienced the strongest employment gain in more than two years, adding 38,300 jobs. Expansion has occurred in most industry segments, he said.
"During the height of the oil surge, people talked about the 'Texas miracle,' with economic growth at a rapid pace," Perryman said. "However, it's even more impressive to me that we've been able to create about 400,000 jobs over the past two years with our largest export industry firmly in the doldrums."
Perryman said the state's economic diversification efforts in high tech and stability from higher education and health care have paid off.
"Looking ahead, the Texas economy is likely to continue to diversify away from dependence on oil, though clearly energy will remain an important driver of business activity," he said.
Expansion in Texas is projected to outpace the nation over the next five years, Perryman said. Real gross product is forecast to grow from a 2016 level of $1.5 trillion to about $1.8 trillion in 2021, representing a 4.11% annual rate of expansion. All major industry groups are projected to expand through 2021, with the services, mining, and wholesale and retail trade segments likely to experience the largest growth in annual real gross product.
