S

o, anyway, how are the state of Texas’ finances going these days?

Pretty well — thanks for asking.

If you were to whiteboard the best financial practices for a big state, you would want three things. First, transparency, both for officials making decisions as well as for residents paying taxes. Next, you would want a conservative balance between expected revenues and expected spending. Finally, you would want to ensure those revenues stayed strong and steady throughout an economic cycle.

In Texas, we’ve actually got considerable financial transparency, which I’ll describe below. We’ve also got a conservative balance sheet.

Unfortunately, with the COVID-19 recession, there’s a lot to worry about when it comes to ongoing revenues. But as Meat Loaf used to sing, two out of three ain’t bad.

Actually, that last statement is a little exaggerated for the purposes of making a late-’70s rock reference, so let me qualify it a bit. I expected to find financial devastation at the state level but instead found mere areas of concern.

Let’s start with the transparency part.

The state comptroller’s office supports a website all you taxpayers should know about, the State Revenue and Expenses Dashboard. This lets you create color-coded visualizations of all state revenues and expenses from 2011 to 2020. The “picture is worth 1,000 words” idea is that we can intuit changes over time by building with and working with a dashboard that shows exactly which categories we want it to. The tool also lets you download data into a spreadsheet for more nerdy fun. Which I have done. And, oddly enough, enjoyed.

Some initial insights from the comptroller’s visualization tool:

Transfers from the federal government are the largest single source of state revenue. (Sorry for you folks who believe in the sovereignty and self-sufficiency of the state.)

The biggest source of locally derived revenue is retail sales taxes, at 57 percent of all tax revenue in 2019 and 26 percent of all state revenue. This means state revenue will be hugely impacted by recessions like this one.

Oil extraction tax and gas extraction tax revenue is smaller than I expected, about 3 percent of tax revenue and 1 percent of all state revenue.

A related page on the comptroller’s website, the Monthly State Revenue Watch, shows state taxes and other revenue sources, which are updated

Bloomberg News file photo Budgeting at the Capitol next year will be tougher, but all is not bleak for Texas Inc.