Tax revenue in Texas increased by a record 25.6 percent in the current fiscal year through August, driven by economic growth and inflation, according to state Comptroller Glenn Hegar.
Since 1988, growth in all funds tax collections has exceeded the prior fiscal year by double digits just five times. And even then, they were only in the range of 10 to 13 percent. The increase in fiscal 2022 to date is almost double the largest increase seen since 1988.
State sales tax receipts tend to spike during periods of high inflation. The 12-month Consumer Price Index (CPI), a measure of annual inflation, has remained above 7 percent for every single month in 2022, hitting a peak of 9.1 percent in June.
Sector-Wise Tax, Future Collections“The strong growth in August came from receipts remitted by the oil and gas mining sector, which were up by nearly 80 percent compared with a year ago,” Hegar said in the statement.
“Receipts from the construction, manufacturing, and wholesale trade sectors showed double-digit growth for the ninth consecutive month, demonstrating continued strong spending by businesses in the state.”
In the retail sector, receipts from almost all segments were higher than a year back, with grocery sales and online shopping topping the list. Restaurant receipts were also higher.
However, receipts from sporting goods, hobby stores, and clothing and accessories stores were marginally lower when compared to August 2021.
“State revenues will be affected by the current geopolitical crises, continued uncertainties related to the ongoing pandemic, high inflation, and evolving federal monetary policy,” the report states.
When tax cuts enacted during fiscal 2022 and 2023 take full effect, revenue growth also will be limited or reversed, it warns.