WEEK IN REVIEW
TEXAS ECONOMY LOOKING STRONG
|The Senate Finance Committee began public hearings on the budget this week.|
(AUSTIN) — The Texas economy is robust and revenue collections are up, according to testimony offered before the Senate Finance Committee on Wednesday. John Helleman, Chief Revenue Estimator for the Office of the Comptroller, briefed Senators preparing to write the budget on just how much money they will have. He told them that increasing oil production is keeping Texas at the head of the pack as states move out of the national recession.
Texas state revenue comes largely from three sources. The sales tax is the largest revenue generator, making up about two-thirds of state revenue. The rest comes from other miscellaneous taxes and from taxes assessed on oil and gas production. Helleman told Senators that new technologies have allowed Texas to increase oil production substantially over the past few years. The strength of the oil market has had a detrimental effect on the natural gas industry, said Helleman, as producers have decided to develop more lucrative oil wells rather than gas wells. The oil and gas industry is also driving the sales tax increase. Helleman said that while the retail component of sales tax collections remains roughly the same, sales tax assessed on oil exploration equipment, construction equipment and other industries related to oil and gas have increased substantially with the increase in production.
Helleman said the Texas job market has also completely rebounded, and has recovered all of the jobs lost in the state since the recession began, and then some. Texas lost nearly half a million jobs during the worst of the recession. Since then, the state has gained about three-quarters of a million jobs, for a net job increase of about 258,000 over pre-recession levels. Housing prices are also rebounding. Though Texas never saw the kind of housing price decline as many of the states hit worst by the recession, Helleman said that 2012 was the best year for housing prices in Texas in a long time. He said that this increase in housing prices will lead to an increase in property tax collections, which in turn will mean more money for schools.
Committee Chairman Tommy Williams of the Woodlands reiterated his commitment to reducing the state's reliance on general revenue dedicated funds. These are funds that are designated for a certain purpose by statute, called general revenue dedicated (GRD). Past legislatures have elected to use these dedicated funds for other purposes, in order to balance the state budget. Though Williams thinks it's a long-term goal, he wants to start ending this practice this session. "I think there is wide support on both sides of the aisle to try and correct that problem," he said. "I will tell you that I think it's going to be tough to write a budget that doesn't make some use of GRD funds, and we're going to have to wean ourselves off of this GRD as we move forward." As introduced, the initial Senate budget doesn't use any GRD to balance.
The Senate will reconvene Monday, January 28 at 2 p.m.