When Texas Comptroller Glenn Hegar released his latest formal forecast three months ago, he predicted “moderate growth” for the state economy over the next two years despite anticipated “prolonged weakness in oil and gas markets.”
Now oil prices aren’t just weak, they’re collapsing. Hegar must not be shy about recognizing this and producing a new forecast for the state economy and budget if needed.
Hegar’s Oct. 13 Certification Revenue Estimate noted that oil prices dropped from an average of $101.45 per barrel in 2014 to $64.94 per barrel in 2015.
He forecast an average $49.48 per barrel in 2016 and $56.52 per barrel in 2017.
Oil trading in New York dipped briefly below $30 a barrel on Tuesday and was trading Wednesday afternoon at around $30.50 a barrel.
Texas has a diversified economy. Oil production taxes amount to only 4.2 percent of state general revenue tax collections. Natural gas production taxes make up 2.1 percent of those collections.
Hegar said in October that conservative budgeting by the Legislature would provide an “ample cushion” to absorb the effects of a slower Texas economy. He must tell us if that cushion shrinks.