Last week, Texas Comptroller Glenn Hegar released the Biennial Revenue Estimate 2016-17 that acts as a guidepost for how much revenue the 84th Texas Legislature will have available to appropriate during the 2015 Legislative Session. Given the state’s constitution requires a balanced budget, the report also sets the stage for how much legislators have available to spend and cut taxes.
The report, along with the infographic below, shows that there will likely be $113 billion in general revenue-related funds available. The estimated amount of total funds available, including state and federal funds, is $220.9 billion.
With the expectation of a large potential surplus at the end of the current budget period, Texans are taxed too much. We’ve all noticed the drop in the price at the pump as oil has declined precipitously since last summer. Though lower gasoline prices leave more money in our pockets, lower oil prices contribute to less oil taxes.
Baked in the comptroller’s revenue estimates include oil price projections of $64.35 in fiscal 2015, $64.52 in 2016, and $69.27 in 2017. Though the U.S. Energy Information Administration (EIA) forecasts over calendar years and not fiscal years, the comptroller’s and EIA’s projections are in the same ballpark. These oil prices during the upcoming budget period contribute to a 14.3 percent decline in oil production and regulation taxes compared with the current period.
Despite economic concerns in Texas over the steep drop in oil prices, the comptroller’s revenue estimate provides evidence that if legislators sufficiently limit spending to cover core government functions there should be plenty of revenue available for substantial tax relief.
Much of the increase in state revenue would come from an estimated 8.9 percent increase in sales taxes, which account for about 55 percent of total state revenue compared with roughly 6 percent from oil taxes, as people have more money to spend after paying less at the pump.
Bottom line: If the 2016-17 budget doesn’t grow by more than the 6.5 percent—$142.2 billion in state funds and $217.1 billion in all funds—that’s outlined in our conservative Texas budget, the Legislature could have enough money to provide substantial tax cuts.
With the costly, complex nature of the margin tax that the Tax Foundation finds fault with on many levels and distorts economic activity, legislators should make it a priority to limit spending to essential public goods and services while using extra taxpayer dollars to put the margin tax on a path to extinction.