Texas has $2.8 bil­lion more to spend

Comp­trol­ler raises es­ti­mate for 2-year bud­get cy­cle, giv­ing Leg­is­la­ture more to work with next ses­sion.

Austin American-Statesman - - FRONT PAGE - By Asher Price ash­er­price@states­man.com

A re­bound­ing oil mar­ket and a blis­ter­ing econ­omy led the state’s chief ac­coun­tant Wed­nes­day to in­crease his rev­enue es­ti­mate for Texas’ cur­rent two-year bud­get cy­cle by $2.8 bil­lion.

The up­shot is that, within cer­tain bounds, law­mak­ers will have more money to play with as they make spend­ing de­ci­sions af­ter re­turn­ing to Austin in Jan­uary.

In a let­ter Wed­nes­day to other state lead­ers, state Comp­trol­ler Glenn He­gar said Texas will have $110.2 bil­lion for gen­eral pur­pose spend­ing for 2018-19.

That’s up from a $107.3 bil­lion pro­jec­tion He­gar had is­sued in Oc­to­ber.

With un­em­ploy­ment at his- toric lows — Texas added more than 350,000 new jobs in the 12 months end­ing in May 2018 — more Tex­ans were buy­ing goods and pay­ing sales taxes.

Through June, sales tax col­lec­tions, Texas’ largest source of state tax rev­enue, are up 10 per­cent from June of last year, ac­cord­ing to the comp­trol­ler’s of­fice.

Mean­while, oil and gas prices have shot up, with pro­duc­tion taxes fur­ther spilling into state cof­fers.

n eco­nomic ex­pan­sion ex­ceed­ing our ex­pec­ta­tions from last year has re­sulted in rev­enue col­lec­tions this fis­cal year out­pac­ing (rev­enue) pro­jec­tions,” He­gar said.

Some of the money is al­ready locked up: One chunk of rev­enue will go to the rainy day fund and an­other to the state high­way fund.

To the ex­tent the new rev­enues give law­mak­ers flex­i­bil­ity, their de­ci­sions are sure to have a po­lit­i­cal fla­vor.

Tal­madge He­flin, direc­tor of the Cen­ter for Fis­cal Pol­icy at the Texas Pub­lic Pol­icy Foun­da­tion, said he wants law­mak­ers to cut taxes on busi­nesses.

“With more money com­ing in, one of the things we hope they look at se­ri­ously is tax re­lief,” he said.

Eva DeLuna Cas­tro, direc­tor of the In­vest in Texas Team at the Cen­ter for Pub­lic Pol­icy Pri­or­i­ties, said the money could be used to pay for pro­grams — from used

tire re­cy­cling to parks main- ten­ance — whose funds are now used to help bal­ance the bud­get.

“What’s the point of hav­ing a life jacket on board if the boat goes down with the pas­sen­gers?” Cas­tro said.

Ad­dress­ing the needs of coastal ar­eas hit hard by Hur­ri­cane Har­vey, which struck af­ter the last leg­isla­tive ses­sion ended, is sure to loom over ap­pro­pri­a­tions de­ci­sions.

Law­mak­ers could spend as much as $2 bil­lion from the rainy day fund to subsi- dize school dis­tricts who saw their prop­erty ap­praisals and re­sult­ing tax rev­enues dev­as­tated by the dam­age wrought by Hur­ri­cane Har­vey.

The re­vised rev­enue es­ti­mate “is wel­come news,” said state Sen. Jane Nel­son, R-Flower Mound, who helms the state Se­nate Fi­nance Com­mit­tee, “and an­other sign that our ef­forts to spur eco­nomic growth are work­ing. Be­tween Har­vey and other sup­ple- men­tal needs, the up­com­ing

bud­get will be a chal­lenge — but this ad­di­tional rev­enue will make a big dif­fer­ence.”

In June, the Fed­eral Re­serve Bank of Dal­las es­ti­mated that the num­ber of Texas jobs would grow by 3.3 per­cent this year. The Dal­las Fed also re­ported last month that oil and gas pro­duc­tion rose for the sev­enth quar­ter in a row and that many oil and gas firms said they are

in­creas­ing wages and ben- efits to re­cruit and re­tain em­ploy­ees.

But He­gar sounded a cau­tion­ary note about fu­ture eco-

nomic per­for­mance. “While it may be true that eco­nomic ex­pan­sions do not die of old age, it’s vir­tu­ally cer­tain that we will eventu- ally face an eco­nomic con­trac­tion that puts pres­sure on state rev­enue col­lec­tions,” he wrote.

Changes in fed­eral law — the state, for ex­am­ple, will be pro­hib­ited from col­lect­ing sales tax on in­ter­net ser­vices start­ing in 2020 — Trump ad­min­is­tra­tion poli­cies; and the fate of the oil mar­ket could af­fect bud­get num­bers, he wrote.

“The Texas econ­omy ben­e­fits from in­ter­na­tional trade,

par­tic­u­larly in North Amer­ica. Fed­eral pol­icy af­fect

ing such trade, in­clud­ing a with­drawal from the North Amer­i­can Free Trade Agree­ment, would di­rectly harm the state’s eco­nomic growth,” he wrote. “Es­ca­lat­ing tar­iffs also pose a po­ten­tial threat to trade and the Texas econ­omy and could harm some of our state’s lead­ing in­dus­tries while slow­ing our eco­nomic growth.

“Our econ­omy — and state rev­enues — also can be af­fected by sud­den swings in the price of oil. In fact, climb­ing oil prices and pro

duc­tion are a pri­mary con­trib­u­tor to this fis­cal year’s re­mark­ably strong rev­enue growth. A down­turn in those prices could re­sult in fis­cal 2019 rev­enue col­lec­tions fall­ing short of this up­dated fore­cast.”

Comp­trol­ler Glenn He­gar said state will have $110.2 bil­lion avail­able for 2018-19.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.