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State sales tax revenues continue their slide, while oil and gas begins to recover

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Written by: Lydia DePillis

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State sales tax revenues declined again in June, the Texas Comptroller announced yesterday, but collections from oil and gas taxes appear to have bottomed out and are starting to recover.

The state took in $2.2 billion in sales taxes last month, which is less than 1 percent below the previous June. For the three months ending on June 30, that leaves the state 1.9 percent below the same quarter last year. Not good news, for a category that makes up 56 percent of all tax collections.

Unless Texans go on a huge shopping spree soon, the state’s total revenues for the 2016 fiscal year, which ends Aug. 31, will decline from last year, after climbing steadily since 2010.

On the whole, however, sales taxes — as well as auto rental and sales and motor fuel taxes, which are the state’s second and third largest sources of tax revenue — haven’t fluctuated wildly over the past couple of years. Here’s what collections look like month by month:

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Although a much smaller source of revenue, oil and natural gas production taxes have been incredibly volatile. Oil production taxes in particular quadrupled from 2009 to 2014, before falling off a cliff last year as prices collapsed and drillers took wells offline. Compared to the same period last year, oil production taxes are down 42.7 percent in 2016, and natural gas production taxes are down 57.7 percent.

But the monthly trend shows that the freefall has been arrested, corresponding with a rally in oil prices. If the sentiments of energy executivesare any indication, that upward trend may continue — and in turn start to lift consumption taxes, which respond to the health of oil and gas.

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TAGS: Oil, Gas, Drillers 


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