Texas Comptroller Glenn Hegar Releases Biennial Revenue Estimate Report for 2016-2017 Budget
Texas Comptroller Glenn Hegar released the state’s Biennial Revenue Estimate today, which projects the legislature will have $113 billion available to spend in the 2016-2017 state budget.
To calculate the estimate, the comptroller’s office looks at the projected ending balance for the current fiscal year ($7.5 billion) and adds that to the projected amount of collections - including state taxes and fees - for the upcoming fiscal year ($110.4 billion). Of that total, $5 billion is being set aside for transfers to the Rainy Day and State Highway funds, leaving legislators an estimated $113 billion for the next biennium.
According to the report released Monday, January 12, Texas saw dramatic non-farm job increases from 2008-2014, adding more than 1.1 million. Of the largest 10 states, only Texas, California, New York, North Carolina and Florida saw growth, according to the comptroller's office. Texas added almost 1 million more jobs than California’s 269,300 at 1,178,900.
Hegar attributes Texas’ relatively successful recovery from the recent recession to a higher job-growth rate than other states.
This was partly attributable to the recent shale oil boom in Texas which helped counterbalance a sluggish national recovery and weakness in other sectors of the economy”
The report anticipates unemployment rates to remain steady at around five percent for the next several years, while Texas' economy is expected to grow. According to the report, the economy saw inflation adjusted growth rates of 4.3 and 3.7 percent in 2013 and 2014, respectively. The Comptroller’s office projects Texas' economy will grow by three percent in the Fiscal Year 2015, 3.2 percent in FY 2016, and 4.1 percent in FY 2017.
Issues Facing Texas' Economy
Although unemployment, job and economical growth rates are favorable in Texas, Comptroller Hegar warns that lower oil prices may soon affect the burgeoning Texas economy.
“The significant drop in oil prices in recent months will likely lead to a marked slowdown in oil exploration and production. This slowdown will dampen overall economic growth in Texas,” said Hegar. “However, in addition to the economic boost felt by Texas motorists as a result of lower gasoline prices, there are industries in Texas’ diverse economy such as transportation and some manufacturing that will benefit from lower energy prices. This, coupled with continued strength in construction, professional services and other sectors of the broader economy, should somewhat counterbalance a slowdown in the energy sector.”
Another issue Texas faces is volatile sales tax collections over the last decade when compared to the previous decade. The Comptroller’s office reported continuous growth from 1991-2001. Between 2002-2014, Texas saw sales tax collection growth percentages of more than 10 percent, but also saw years with collection amounts shrinking.
TAB Responds to Biennial Report
The Texas Association of Business released a response to the report calling for a constitutional amendment dedicating 100 percent of motor vehicle sales taxes to the construction and maintenance of Texas’ roads as well as ending diversions from the Highway Trust Fund into other projects.
During the November General Election, voters overwhelmingly passed the Texas Transportation Funding Amendment, also known as Proposition 1, which appropriated funds from the Rainy Day Fund to the State Highway Fund for maintenance and repairs. A spokesman with TAB said the $1.6 billion dollars appropriated for this fiscal year is a step in the right direction, but that closer to $4 billion is required each year for Texas to maintain roads and stay consistent with growing congestion.
The Texas Association of Businesses is also pushing a 50 percent cut in the franchise tax rate and the elimination of business personal property taxes. TAB CEO Bill Hammond said enacting their suggestions would be tantamount to investing in Texas’ future.
"We could create thousands of new jobs by making these investments in transportation and strengthening our economy by cutting taxes,” said Hammond. “Currently, business pays a combined 63 percent in state and local taxes. It is time to reduce that share and make the tax burden between businesses and consumers more equitable."
Comptroller Hegar told Robert Pratt of Pratt on Texas the office will release updated estimates throughout the year as significant developments occur.