Texas and Oklahoma tax revenue goes in different directions amid oil slump

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Texas sales tax revenue for November set a record for any month at $3.18 billion, an increase of 6.2% over the same month last year, state Comptroller Glenn Hegar reported.

In the same month, neighboring Oklahoma recorded its first drop in monthly receipts in more than two and a half years, Treasurer Randy McDaniel reported.

While both oil and gas-producing states were affected by slowdowns in the oilfields, Texas’ more diverse economy appears to be less affected.

November’s collections marked the second time in Texas history that sales tax revenue exceeded $3 billion. The previous record of $3.01 billion came in May.

“November state sales tax growth was led by collections from the wholesale trade, construction and restaurant sectors, while collections from the oil and gas mining sector declined since last year,” Hegar said.

Natural gas production tax revenue of $119.6 million was down 33.1% from November 2018 while oil production tax income of $344.4 million fell 1.8%.

Collections from sale of merchandise and services online were also a factor, Hegar said.

“Texas realized an increase in the state’s sales tax revenue collections from remote sellers and online marketplace providers, pursuant to new collection requirements resulting from the implementation of the U.S. Supreme Court’s decision, Wayfair v. South Dakota, and passage of House Bill 1525 during the 86th Texas Legislature,” he added.

Total sales tax revenue for the three months ending in November 2019 was up 4.8% compared to the same period a year ago. Sales tax is the largest source of funding for the state budget, accounting for 57% of all revenue in a state without an income tax.

Two other categories of sales tax revenue — motor vehicles and fuel — were also up.

Taxes on sales and rentals of vehicles rose 4.2% to $422.3 million. Motor fuel taxes of $327.3 million rose 5.1% over the same month last year.

Texas’s growth in sales tax revenue amid a slumping oil and gas economy illustrates the diversification of the state’s economy since the catastrophic crash of 1986 oil prices and the mild economic slowdown of 2014-16 amid a 60% drop in oil prices.

Oklahoma’s November total monthly collections were $989.7 million, down by $43.8 million, or 4.2%, from last year. The last time monthly gross receipts were less than the same month of the prior year was in March 2017, which was 32 months ago.

Analysis by McDaniel’s staff indicates the primary reasons for the decrease are lower sales tax and oilfield tax payments. Sales tax receipts are down for a fifth time in the past six months, and oil and gas gross production collections are considerably lower for a third consecutive month.

“Lower energy prices are having a significant influence on gross production tax receipts,” McDaniel said. “The recent large layoffs in the energy sector impact both families and the overall economy. My heart goes out to the families affected by the layoffs.”

The revenues do not include the impact both states felt in December from widespread layoffs in the oilfield services sector.

Houston-based Halliburton told the Oklahoma Office of Workforce Development of the decision to end more than 800 jobs in El Reno, Oklahoma, on Dec. 2.

"The layoff is expected to be a permanent employment loss," Michael Queener, Halliburton vice president of midcontinent operations, wrote in a letter to the workforce development office.

Since 2018, Halliburton has lopped more than 1,400 jobs in Oklahoma, Colorado, Wyoming, New Mexico and North Dakota.

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