From the Dallas Morning News
AUSTIN — Comptroller Glenn Hegar on Wednesday increased his revenue estimate for the current two-year budget cycle by $2.8 billion.
Hegar said tax collections have exceeded his expectations because of a strengthening Texas economy and higher oil prices and production.
“The best ongoing indicator of the robust Texas economy is the state’s rate of job growth,” the Republican comptroller said in a written statement.
“Texas added more than 350,000 new jobs in the 12 months ending in May 2018, and the state’s unemployment rate has been at or near historic lows in recent months.”
While issuing a few caveats, Hegar said he looks for “continued growth through fiscal 2019 for both the economy and state revenue.”
As chief tax collector, Hegar enjoys special power under the Texas Constitution. His biennial revenue forecast, issued in January of odd-numbered years, caps how much lawmakers may spend in the two-year budget they proceed to write.
Early last year, he told the Legislature it would have $104.9 billion available in general-purpose revenue in the current cycle, which began last September. Last October, he bumped that up to $107.3 billion. On Wednesday, Hegar pushed the estimate to nearly $110.2 billion — a 2.6 percent increase from October.
He noted that last year he predicted single-digit growth in collection of the state’s 6.25-cent sales tax. He now expects a 10 percent increase this year.
Also, he based his October projections on $50 a barrel oil this year and $53 a barrel next year. On Tuesday, the price of sweet crude, known as West Texas Intermediate, closed above $74 a barrel. “Climbing oil prices and production are a primary contributor to this fiscal year’s remarkably strong revenue growth,” he said in a letter to Gov. Greg Abbott, Lt. Gov. Dan Patrick, Speaker Joe Straus and all 181 lawmakers.
The state — and his revenue forecast — is susceptible to a downward swing in oil prices, too, he warned.
Notes of caution
“A trade war, a withdrawal from the North American Free Trade Agreement or a significant downturn in the price of oil would reduce our potential economic growth,” he said.
For now, though, there is breathing room in what had been a fiscal vise.
During last year’s legislative session, lawmakers passed a two-year budget that spent $216.6 billion, including federal funds and investment income. Considering only general-purpose revenue, the budget appropriated $106.7 billion.
While a year ago, the state appeared toward ending the current cycle in August 2019 with a slender cushion of $94 million in its general fund, the projected end balance now has increased to nearly $2.7 billion, Hegar said.
As legislators prepare for a new session in January, though, they’re unlikely to be flush with cash.
Last year, they underfunded Medicaid, the state-federal health insurance program for the poor, by more than $2 billion. That was an even bigger Medicaid IOU than they usually write.
