State’s revenue $1B worse than estimated
AUSTIN — Texas’ fiscal picture is nearly $1 billion worse than state Comptroller Glenn Hegar predicted last year when he lowered his revenue projection, thanks largely to the faltering oil and gas industry.
“Overall, it continues to be a drag on the overall state economy and the overall receipts into the state treasury,” Hegar said in an interview with the San Antonio Express-News, noting that effects of the oil and gas industry’s struggles ripple beyond areas where the energy business is concentrated.
“We’re continuing to grow as a state, but just much more modestly than we and others would have predicted, because it’s had a much greater drag than many would have anticipated,” Hegar said.
The state still has enough money to support the current twoyear state budget, which passed its halfway point when the state closed the books on the 2016 fiscal year Aug. 31, Hegar said. That’s because lawmakers last year left several billion dollars unspent when they crafted the spending plan.
The savings proved fortuitous when Hegar revised his revenue estimate last October, predicting that tax collections over the two-year budget period would be $4.6 billion less than his original forecast at the start of 2015.
But tax receipts and other revenues combined in fiscal year 2016 fell $960 million more than even that revised estimate, Hegar said.
That total reflects tax collections that were $1.6 billion less than anticipated — such as sales and oil and gas tax revenues — offset by higher-thanexpected income in areas including the lottery and vendor drug rebates to the state.
The state also will benefit from the performance of the franchise tax, which is bringing in more revenue than anticipated. The overall lagging revenues put another dent in money available for transportation under a constitutional amendment that dedicated a portion of oil and gas tax revenue to that purpose, slashing it by $155 million.
There’s also a $155 million reduction in money that goes to fattening the state’s rainy day fund, also fueled by severance taxes. That fund will reach a record high of $10.1 billion this year.
The remaining $651 million is a dip in money that is available to support general spending. While a small portion of the overall budget, the reduction comes as state budget writers already face a host of demands as they look toward the regular legislative session that begins in January.
Needs and wants range from addressing high-profile problems in the system for protecting abused and neglected children to a Texas Department of Public Safety request to beef up border security to Medicaid expenses that, as usual, exceed money allocated for the program.
“Texas as a state has grown at a nice pace, a very healthy pace, over the course of the last 20 years,” Hegar said. “Those fundamentals haven’t changed.
“But is next session going to be a much tighter budget session? Oh, absolutely,” Hegar said. “It’s rougher waters than they’ve had in the last couple of sessions, but we’ll be able to get past this.”
Legislative leaders said budget writers’ approach has served the state well as they keep a close eye on fiscal twists.
“When we last met, the Legislature left billions of dollars unspent as a hedge against economic uncertainty. While that has proven to be a wise decision, we continue to face some challenging fiscal conditions,” said House Speaker Joe Straus, R-San Antonio.
Lt. Gov. Dan Patrick said the “conservative budget” approved last year by lawmakers “addressed the priorities of Texans but allowed us to prepare for this situation.” He said leaders will watch the trends closely as they prepare for the upcoming legislative session.
“It is too early to predict funding decisions. When we receive our revenue estimate, we will begin the process of making sure we meet our needs within the confines of what we can afford,” said Senate Finance Committee Chair Jane Nelson, R-Flower Mound, referring to the estimate Hegar will make before the next regular legislative session begins in January.