Texas – Sales tax revenue dips 13.2% in May, the largest year-over-year decline in a decade

Texas collected about $2.6 billion in state sales tax revenue in May, leading to the steepest year-over-year decline in over a decade, Comptroller Glenn Hegar announced Monday.

The amount is 13.2% less than the roughly $3 billion the state collected in the same month last year.

This latest reminder of the economic devastation facing the state — and how recovering from it could last months if not years even as businesses begin reopening their operations, which feed into the sales tax revenue.

The numbers are also reflective of the lag in data as revenues are collected and then reported by the state. Last month, for example, Hegar announced that the sales tax revenue collections for purchases in March dropped roughly 9% — which at the time was the steepest decline since January 2010.

Other major tax collections were also down in May, Hegar said Monday. Motor fuel taxes, for example, were down 30% from May 2019, marking the steepest drop since 1989. And the hotel occupancy tax was down 86% from May 2019, marking the steepest drop on record in data since 1982.

State leaders are already beginning to offset some of the state’s losses, which will all but certainly be at the forefront of the next regular legislative session in 2021.

Some Republicans have pushed for double-digit budget reductions, arguing the economic fallout merits such an action. After Hegar’s last announcement on sales tax revenue in May, the hardline conservative House Freedom Caucus issued a statement calling on state agencies “to immediately identify a minimum of ten percent of non-essential expenditures to eliminate,” saying that “the need for strict fiscal responsibility going into the next legislative session” is clear.

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Texas Tribune 
By Cassandra Pollock
June 1, 2020