Texas economy

Texas economy buzzes as COVID-19 ebbs, giving lawmakers more to spend, Comptroller Glenn Hegar says

AUSTIN — Comptroller Glenn Hegar released a revised revenue estimate Wednesday that gives lawmakers at least $7 billion more for discretionary state spending either in the special session that begins Thursday or when they return for the regular session of 2023.

To spend it in the special session, the Legislative Assembly would have to apply the new dollars to the topics Governor Greg Abbott specified Wednesday in his “call,” or agenda, for the 30-day meeting.

They include improving law and order at the Texas-Mexico border, reducing local school property taxes, increasing state payments to foster care providers, and increasing efforts of the state to fend off cyberattacks.

Hegar pointed to soaring auto sales and strong consumer spending as he announced the good financial news.

“It’s really amazing how strong overall economic activity is now,” he said in an interview.

In a letter to Abbott, Lt. Gov. Dan Patrick, and House Speaker Dade Phelan, Hegar said he expects the state to end the current two-year budget cycle on Aug. 31 with an ending general revenue balance of $5 billion. In early May, he predicted the cushion would be just $725 million.

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Part of the gain was the result of additional federal COVID-19 relief funds sent to Texas, which could be redeemed for state general purpose revenue expenditures, he said in the interview.

Hegar also wrote to Big 3 leaders that lawmakers would have $123.02 billion in general purpose revenue available for the next cycle. That compares to its May estimate of $115.65 billion.

Unless lawmakers spend additional dollars, which seems very likely, the state’s general funds will close the 2022-23 cycle with an ending balance of $7.85 billion, Hegar said.

This is in addition to a projected rainy day fund balance of $12 billion that it forecasts as of August 31, 2023.

Hegar noted that sales tax collections for the three months ending last month were up 26.4% from the same period a year earlier and 14.1% from the same quarter in 2019. .

“Consumers have undoubtedly pent up demand,” he said. “Because of COVID, people want to get out and engage in the economy.”

Many have accumulated savings over the past year and are eager to spend, especially on motor vehicles, he said. June’s motor vehicle sales and lease tax collection hit a record $591 million, he noted.

“Finally, whether or not you agree with all of the federal stimulus packages, that’s a significant amount of money that’s been pumped into the economy,” said Hegar, a two-term Republican.

In his letter, Hegar issued notes of caution, saying global supply chain disruptions and new variants of the coronavirus could hamper economic progress.

“And as always, energy prices remain inherently difficult to predict,” he wrote.

Its May revenue estimate was based on an estimate of $60 a barrel of oil in fiscal year 2022 and $62 a barrel the following year. Global oil prices have already topped $70 a barrel, Hegar noted.

Under a “pay as you go” provision that Texas voters approved as a constitutional amendment in the 1940s, lawmakers can only spend the revenue set forth by the comptroller.

“Overall, … the Texas economy appears poised for continued growth and our economic outlook is more optimistic than just a few months ago,” Hegar concluded.

Consumer spending helps reduce Texas deficit, easing fiscal pressures, Comptroller Glenn Hegar says