Paying the price for cheap gas at the pump

The oil and natural gas slowdown is hitting Texans in the pocketbook.

But even though state revenues will fall $2.6 billion short of Comptroller Glenn Hegar’s original guess, the Legislature’s careful budgeting allowed enough leeway in the $209 billion budget to make up the difference.

Hegar predicted oil prices in the $65-$70 range, but the current price barely pushes $50.

The surprise is a drop in sales taxes. In June and August, sales tax revenue failed to exceed the previous year, the first declines since April 2010.

Texas still has plenty of money for the 2016-2017 biennium (the Legislature meets and writes the budget every two years). The sharpest effect will be on the highway fund, which will fall $600 million short of expected oil and gas revenues in 2017, with a chance to recover some in 2018 if voters approve Proposition 7 on Nov. 3.

The “rainy-day fund” state piggybank will climb to a best-ever $10 billion, but budget writers had hoped for $11 billion.

In his first term, Hegar is taking some flak over oil and gas projections. He said just two months ago that predictions would hold and cheaper gasoline prices might help consumer spending.

It’s not working out that way, but there is no reason to panic or point fingers.

This story was originally published October 14, 2015 at 5:51 PM with the headline "Paying the price for cheap gas at the pump."