Business Leader: Texas Economic Recovery Depends On Pro-Business Environment, Education Investment

By Sarah Downey | The Center Square

The Center Square – State revenue totals for fiscal year 2020 were down 1.5 percent from the previous year but still came out ahead of recent projections, according to the Texas Comptroller’s office.

“The pandemic continues, and its impact on Texas businesses is significant,” Aaron Cox, chief operating officer of the Texas Association of Business (TAB), told The Center Square. “It’s not surprising to see some ups and downs both in sales tax collection and in Texas businesses’ getting back on their feet fully.”

According to figures provided by Comptroller Glenn Hegar:

• General revenue-related revenue for fiscal 2020 totaled $56.98 billion, down 1.5 percent from fiscal 2019.
• All Funds tax collections were $57.38 billion, down 3.4 percent from fiscal 2019.
• Sales tax revenue was $34.10 billion, up 0.2 percent over fiscal 2019.
• Motor vehicle sales and rental tax revenue were $4.8 billion, down 3.9 percent from fiscal 2019.
• Franchise tax revenue was $4.42 billion, up 4.8 percent over fiscal 2019.
• Oil production tax revenue was $3.23 billion, down 16.9 percent from fiscal 2019.
• Natural gas production tax revenue was $925 million, down 45.1 percent from fiscal 2019.
• All Funds revenue was $141.58 billion, up 10.7 percent over fiscal 2019, primarily due to substantial increases in federal funding for pandemic-related assistance.

In the Texas business community, industry leaders have continued to weather the downturn and remain fully committed to helping forge a path to a strong Texas recovery, Cox said.

“Recovery will take time, and we know that the next Legislative session in January will be one of the most challenging, from a budget perspective, that our state leaders have faced in quite a while,” Cox said.

Yearly revenues were slightly ahead of projections from the revised Certification Revenue Estimate (CRE), which was released in July, Hegar said.

“This was, in part, due to surprisingly strong July sales tax collections as Texans’ spending for home improvement projects increased while they spent more time at home both for teleworking and staycations, in lieu of leisure travel,” Hegar said. “Those July gains, however, were largely reversed in August, bringing actual collections closer to, but still ahead of, our estimate.”

The August state sales tax revenue totaled $2.82 billion, down 5.6 percent compared to August 2019. Most of August’s sales tax revenue came from sales in July, which is then remitted to the state in August. July’s increase in COVID-19 infection rates likely contributed to slower economic activity, Hegar said.

“We know that a strong Texas recovery will require the state to double down on its commitment to a pro-business climate, to fully invest in public and higher education so we have the workforce to meet the needs of Texas employers today as well as the future, and to look for innovative ways to fund critical infrastructure like Texas roads that will, literally and figuratively, Keep Texas Moving,” Cox said.