Texas sales tax stays on record pace
Texas sales tax collections continued their record pace in February, growing 3.5% over the same month last year to $2.89 billion.
The collections were the highest on record for the month of February and down slightly from January’s $3.08 billion, following the typical pattern. The highest collections for any month came in November at $3.18 billion. Texas broke the $3 billion mark for the first time in May 2019 and has had three straight months of more than $3 billion since November.
“Growth in state sales tax revenue was led by receipts from the retail trade and information services sectors, while receipts from the construction sector were down from a year ago,” state Comptroller Glenn Hegar said. “Growth in tax receipts from retail trade was slightly boosted by collections from online marketplace providers and remote sellers.”
Most of the February sales tax revenue is based on sales made in January and sent to the agency in February. Total sales tax revenue for the three months ending in February 2020 was up 5.7% compared to the same period a year ago.
With no income tax, Texas derives 57% of its tax revenue from sales tax.
Although the oil and gas sector is facing severe challenges after a collapse in prices, the impact has not registered on state revenues.
Oil production taxes of $371.8 million were up 38.5% in February as natural gas production taxes fell nearly 17% to $136.4 million. Natural gas prices are so low that producers in south and west Texas are burning it in the field rather than incurring the cost of shipping it to market.
Other sources of tax revenue were up slightly. Taxes on vehicle sales and rentals rose 2.1% to $428.9 million. Taxes on motor vehicle fuel edged up 0.6% to $301.2 million.
At The Bond Buyer’s Texas Public Finance Conference in February, Hegar said he expects the rate of growth in revenues to slow amid the COVID-19 outbreak and weakness in the energy sector. But he said he does not expect a significant drop in housing prices in a state with a rapidly growing population.
The Organization of Petroleum Exporting Countries is seeking Russian cooperation in slashing the supply of crude oil to world markets by 1.5 million barrels per day.
The cartel’s 13 members have allied their cause with Russia, which has made inroads into the world’s oil supplies.
Falling prices have severely damaged U.S. producers in shale regions using hydraulic fracking.