Glenn Hegar, the new Texas comptroller, gave the Legislature an optimistic revenue forecast on Monday but also said that the projection could be wrong.
Just 10 days after he took over his new office, the two-term state representative and three-term state senator from Katy said lawmakers will have as much as $113 million in general revenue to spend in the 2016-17 state budget.
The Legislature convenes at noon Tuesday to begin writing the budget and considering what could be more than 10,000 bills and resolutions before the 140-day session ends June 1.
Hegar and his staff foresee an “expanding” Texas economy through fiscal year 2017, although one whose growth will be “moderated” from recent years. He predicts real gross state product will grow 3.2 percent in 2016 and 4.1 percent in 2017, down from 6.8 percent growth in 2012.
But the recent drop in oil prices, from $107 per barrel in June to $46 per barrel on Monday, is the reason to worry. Revenue from oil and gas taxes and sales taxes, which could suffer from the energy downturn, make up more than 60 percent of state general revenue, Hegar said.
Volatility in those two revenue streams in recent years calls for “a very close watch” on them during the session, with updated projections as necessary, he said.
He’s right about that.
Hegar expects oil prices to recover later this year and average $64.52 per barrel in 2016 and $69.27 in 2017. But as he spoke, Goldman Sachs in New York dropped its 2015 projection to $47.15 per barrel.