Online sales taxes are helping with state budget even though it is still going to be slimmer than usual

State Comptroller Glen Hegar briefed the Legislative Budget Board in Austin on Monday ahead of what is expected to be a fairly tight fiscal budget for the state’s next biennial budget. 

Hegar told Senate and House Budget Board members that revenue collections from around the state have exceeded what was initially predicted back in July of 2020 and that certain portions of the state’s revenue estimate are actually looking somewhat fair despite the ongoing coronavirus pandemic. 

Sales tax revenue was among the high points of the brief given to lawmakers on Monday as Hegar noted that sales tax collections from July 2020 were on pace with nearly what was seen just one year prior. Hegar noted in his brief that places such as sporting goods retailers, home improvement outlets, and liquor stores saw major increases in sales tax. Lending credit to the previous legislature, Hegar pointed out that a significant amount of revenue was also derived from online sales tax following the Wayfair ruling by the Supreme Court and legislative action taken by lawmakers which allowed for collection of sales tax from online retailers such as Amazon and Etsy. 

According to Hegar, the state has already collected some $1.25 billion dollars in sales tax revenue derived from online sources. That he says is higher than originally forecasted. 

The likely reason that sales tax revenues for July, 2020 were higher is due in part, Hegar says, federal aid that ended up in the hands of consumers in the form of stimulus payments and Paycheck Protection Program funds. As those funds have been allowed to expire by federal lawmakers hellbent on party line wrangling, consumer spending has suffered and those estimates are likely to have shown dramatically. Hegar will have a better estimate on that when he releases his Biennial Budget Report on January 11, 2020 when the legislative session gets underway. 

While there were some high notes in the briefing by Hegar, there were also plenty of low points. Sectors such as Hotel and Motel tax collections, restaurant and alcohol sales taxes, tourism related tax dollars and oil and gas revenues were all down as a result of the coronavirus and global economic situation. 

Hegar pointed out to lawmakers that while many Texans opted for staycations as opposed to getting out and about spending money, those sectors were naturally down. 

“What we are seeing is a budget that is smaller than the last biennial,” Hegar said. “But the outlook for the 2-year budget is not as dire as we first thought.”

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