(AUSTIN) — Texas Comptroller Glenn Hegar today revised the Certification Revenue Estimate (CRE) upward, increasing his November estimate of General Revenue-related (GR-R) funds available for certification by $13.75 billion.
In a July 14 letter to state leadership, Hegar said the state will have $149.07 billion in GR-R funds available for general-purpose spending for the 2022-23 biennium, resulting in a projected fiscal 2023 ending balance of $26.95 billion, an increase of $14.95 billion from the November projected balance. The ending balance does not account for any 2022-23 supplemental appropriations the Legislature may make.
“This revised estimate includes a net decrease in projected GR-R spending of $1.5 billion yet is mostly driven by tax revenues that rebounded strongly in recent months after being suppressed by the pandemic in the previous biennium,” Hegar said. “In fact, many tax revenue categories reached their highest collections on record, and this fiscal year has experienced the largest one-year increase in total tax collection, as compared with the prior fiscal year, in Texas history. This is especially true of state sales taxes, where monthly collections for each of the last 15 months exceeded $3 billion and averaged $3.5 billion.
“Severance taxes performed extremely well due to elevated oil and gas prices caused by energy market volatility. This is due in part to a strong global economic recovery coupled with the war in Ukraine and a period of limited investment in fossil fuel production and refining capacity. It is important to realize that inflation is a significant contributing factor as to why we have seen record tax collections in sales tax and other revenues over the last year.
“This estimate is subject to substantial uncertainty,” Hegar said. “High inflation, geopolitical conflicts, and renewed COVID restrictions among our global trading partners could impair economic activity. While this is not a recession forecast and continued economic growth is expected, the rate of economic growth is anticipated to slow. Revenue growth in fiscal 2023 is estimated conservatively in view of the degree of uncertainty and heightened risk of a recession.”
The Economic Stabilization Fund (ESF; the state’s “Rainy Day Fund”) and the State Highway Fund (SHF) both receive funding from oil and natural gas severance taxes. In fiscal 2023, the ESF and SHF each will receive $3.58 billion in transfers from the General Revenue Fund for severance taxes collected in fiscal 2022. After accounting for appropriations and investments and interest earnings, the CRE projects a fiscal 2023 ending ESF balance of $13.66 billion.
“I will continue to monitor the Texas economy and state revenues closely, and I will keep the public informed of significant events as they arise,” Hegar said.