Texas closes fiscal year with sales tax revenue record
DALLAS – Continuing its record pace of sales tax collections in August, Texas ended its fiscal year with unprecedented revenue growth of 10.5%, state Comptroller Glenn Hegar reported.
At $31.94 billion through the end of the fiscal year Aug. 31, revenue hit an all-time high, due in part to oil and gas production tax collections that soared 56% year over year to $4.82 billion.
Hegar also said that state sales tax revenue totaled a record $2.87 billion in August, 15.8% more than in August 2017. The previous record for state sales tax revenue was $2.78 billion in November 2017. The all-time record comes during a calendar year in which collections have consistently set monthly records.
“The strong growth in August state sales tax collections compared to a year ago is principally due to the strength of the current economic expansion, but is also due to unusually high audit refund payments in August of last year,” Hegar said. “Led by receipts from the oil- and gas-related sectors, all major economic sectors including manufacturing, wholesale and retail trade, construction and services contributed significant gains.”
On the heels of record collections, Hegar updated his Certification Revenue Estimate for the Legislature in July. The previous forecast of how much revenue the 2019 Legislature would have to spend came in October.
The July revision was the first time the agency has updated a CRE for a reason other than a legislative session in 30 years.
“As we said when we revised the CRE in July, economic growth in Texas in fiscal 2018 was strong with rising oil prices and production providing our state with a big boost,” Hegar said. “Robust severance tax revenues will result in the biggest deposits to the Economic Stabilization Fund and State Highway Fund since fiscal 2015.”
The ESF, commonly known as the “Rainy Day Fund” and State Highway Fund both receive funding from oil and natural gas severance taxes. In November, the Comptroller’s office will deposit $1.38 billion in each of the funds, up from the $734 million deposited in each fund in November 2017. The Rainy Day Fund will have a record balance of $11.9 billion at the end of fiscal 2019, Hegar said.
Across all funds, revenue for fiscal year 2018 came to $120.2 billion, an 8% increase over fiscal year 2017, Hegar said. General revenue-related revenue grew 9.3% to $57.2 billion, while all funds tax collections were $55.6 billion, up 12%.
Total sales tax revenue for the three months ending in August was up 12.1% compared to the same period a year ago.
Sales tax revenue is the largest source of funding for the state budget, accounting for 57% 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. Motor vehicle sales and rental taxes for August came to $486.9 million, up 16.3% over the same month last year.
Motor fuel taxes rose a more modest 1.3% to $309.5 million, while oil and natural gas production taxes shot up 86% to $505.8 million.
The August surge comes one year after the state recorded its last drop in sales tax revenue, a nearly 1% decline. Since then, every month has seen strong increases, with revenues growing better than 10% in seven months out of 12. At the end of the 2017 fiscal year, all-funds revenues of $111.2 billion fell 1.4% below projections.