Totaling $2.86 billion, Texas’ December sales tax collections are 5.3 percent lower than the same month in 2019 and just $120,000 less than that collected in November 2020.
Down five percent over the three-month stretch ending in December compared with 2019, these numbers are evidence of a consistent and elongated struggle since the pandemic arrived in March.
Texas Comptroller Glenn Hegar stated of the total, “December sales tax collections continued recent trends, with receipts from most major economic sectors significantly down from a year ago.”
Most of the taxes collected, however, are based on sales from the previous month. Sales tax collections make up for the vast majority of monthly state income.
Total tax collections are down over seven percent.
“Retail trade was the principal exception,” Hegar added, “with the strongest gains coming from online general merchandisers, building materials and home improvement stores, warehouse clubs and supercenters and sporting goods and hobby stores.”
Collections from motor vehicle sales were up 2.7 percent as were cigarette and tobacco taxes, by 11 percent.
Hegar continued, “Collections from discount retailers also were up, while collections from department stores, clothing stores and other specialty retailers generally were down. Receipts from the wholesale trade sector also were slightly up, due to strength in sales by building materials vendors. Historically low interest rates and pandemic-motivated behavior changes continue to spur a boom in single-family housing starts and home renovations.”
Still trembling from the pandemic and shutdown’s effects, Texas’ oil and gas industry remitted 45 percent and 25 percent less, respectively, compared with December of last year.
Alcohol sales remain down as 28 percent less in sales taxes were remitted to state coffers in December. The leisure and hospitality industry continues to be one of the hardest hit as closure orders, state and local, are quick to target places like bars and restaurants.
Hegar stated, “Receipts from restaurants, entertainment venues and personal service and tourism-related businesses continue to be depressed.”
Texas’ November unemployment rate ballooned to eight percent, but the leisure and hospitality industry showed some promise, adding over 20,000 jobs that month.
Thanks largely to federal-based income and rebates from health services, the state’s total net revenue is 10 percent higher than this month last year. Another significant contributor is the lottery, over 40 percent higher this month than 2019.
When it convenes next week, the Texas legislature will have a bear of a time confronting the state’s requirement to balance the next biennium’s budget during a time of fiscal tumult and preceding record spending.