DALLAS – Texas revenue estimates for the next two years fell 2.3% to $110.4 billion due to a continuing slump in the oil and gas markets, state Comptroller Glenn Hegar reported on Oct. 13.
“We anticipate that prolonged weakness in oil and gas markets will continue to slow our economy,” Hegar said as he released the Certification Revenue Estimate for the fiscal 2016-17 biennium.
Texas operates on a two-year budget drafted by the Legislature in odd-numbered years. The state’s fiscal year runs from Sept. 1 to Aug. 31.
After the legislative session, the Comptroller certifies the budget and provides details and updates on revenue estimates. The CRE comes after a recent report showing that actual revenues for the last fiscal year fell slightly below projections.
The Comptroller’s office now expects revenue available for general spending in 2016 and 2017 to total about $110.4 billion, compared to previous projections of about $113 billion.
A larger-than-expected beginning balance, coupled with conservative budgeting from the 2015 Legislature, will provide an ample cushion for the state to absorb the 2.3% reduction in estimated revenue, Hegar said.
Texas’ State Highway Fund and its Economic Stabilization Fund — the state’s “Rainy Day Fund” — both receive funding from oil and gas severance taxes, and thus will feel the impact of the downturn in energy production, he noted.
The CRE predicts fiscal 2016 transfers of $1.1 billion each to ESF and SHF, in line with the BRE estimate, but fiscal 2017 estimates have been revised downward to about $594 million for each fund.
The Legislature passed a proposed constitutional amendment that would direct more revenue to the state’s transportation needs. If in November 2015 voters approve the proposed constitutional amendment, then a portion of state sales tax and motor vehicle sales tax revenue will be deposited to the state highway fund. The deposits will not begin until fiscal 2018 and therefore will have no effect on the 2016-17 biennium.
