The committee met to hear a presentation on the biennial revenue estimate from the Comptroller’s office and to begin budget discussions. This report focuses only on testimony regarding the revenue estimate.
- Sen. Kevin Eltife asked about timelines; establishing the tax cuts will likely take a lot of time
- Chairman Jane Nelson replied that the committee will have a week set aside for talking through tax cuts; all agencies will have been heard from before that point
- Eltife noted there are many issues that have yet to be addressed and he will have a hard time voting to remove $4 billion annually from the state’s revenue stream before knowing how the needs of the state will be addressed
- Would like to have a presentation on what removing that revenue will look like up to 10 years down the road
- Sen. John Whitmire asked if the tax break vote will be a part of the budget vote or if it will be a separate bill
- It depends on the type of relief being provided; if it is a business tax break it will have to be a separate bill
Tom Currah, Chief Revenue Estimator, Office of the Comptroller
- For the 2016-17 biennium we are expecting around $113 billion available for GR spending
- This reflects a $9 billion increase above last biennium
- Expecting about $7.5 billion in unspent funds from last biennium to carryover; that is included in the $113 billion
- Expecting Texas’ strong growth to slow a bit starting this year because of oil and gas price dips; should pick up again by the end of 2016
- Sales taxes will be about 56% of total tax collections next biennium
- Motor vehicle sales taxes grew 33% in 12-13 biennium; expecting another 19% growth this biennium
- Franchise tax has been essentially flat; expecting less this biennium than last biennium, almost entirely due to reduced rates
- Severance taxes is expected to decline next biennium; taxes are collected based on price and volume so when prices come down revenues come down
- For the ESF, 75% of the amount over 1987 collections are split between Fund 6 (TxDOT) and the ESF
- Expecting the ESF to gain $1.3 billion a year for the next two years including interest
- Projected to have a balance of $11.1 billion at the end of the biennium
- Sen. Kirk Watson asked how the ESF is invested
- It is invested in the treasury pool; very little interest is gained on it
- Watson noted he has been told that it gains .04%; what could be done to change that and get a better return for the taxpayers
- Because it is subject to appropriation it needs to remain fairly liquid
- Watson noted the fund is making less than 1% and we are paying debt at 3-4% ; might make sense to pay off some debt with that fund
- Whitmire asked who controls how the treasury is invested
- The Comptroller’s Office has an investment management agency within it
- Whitmire asked if there has been any reflection on sales tax from the reduction in gas prices
- Those reflections are expected to show an increase in sales tax revenues
- Sen. Kelly Hancock asked if there are estimates on oil and gas volume production to go along with the price projections
- Expect production to track with prices; it should decrease slowly for a while then begin to increase again with prices by the end of the next biennium