After months of decline, Texas’ July sales tax revenue is up 4.3% compared to last year
After months of decline, Texas’ sales tax revenue totaled $2.98 billion in July — a 4.3% increase from the previous year — Comptroller Glenn Hegar announced Monday.
The increase was fueled by a surge in collections from the retail trade sector, leading to collections that “were better than expected, increasing despite the high unemployment due to the pandemic,” Hegar, the state’s chief financial officer, said in a statement.
Online sales, food and beverage purchases and sporting good stores were among the areas that saw increased collections. Other major sectors, like mining, construction, services and restaurants still showed significant declines, Hegar said.
For instance, the state collected $187 million from the state’s oil production tax — down 40% from July 2019 — and $34 million from the hotel occupancy tax — down 42% from July 2019.
The majority of July sales tax revenue is based on sales made in June, when social distancing measures were more relaxed throughout the state.
Hegar also pointed to enhanced benefits under the federal CARES Act as an avenue that likely bolstered consumer spending, despite about 1.3 million Texans with claims for unemployment insurance. However, the extra $600 a week in unemployment benefits expired nationwide July 31.
“With the expiration of these benefits at the end of July, consumer spending and sales tax collections may decline in coming months,” Hegar said.
Since April, the state’s sales tax revenue, which is the largest source of funding for the state budget, has reached historic lows. Total sales tax revenue for May, June and July was down 5.3% compared to the same time a year ago, according to Monday’s news release.
Last month, Hegar released a revised revenue estimate that projected Texas will end its two-year budget with $11.57 billion less in general revenue funds than previously estimated, leading to a $4.58 billion shortfall.
This story was originally published August 3, 2020 at 1:49 PM.
