Sales Tax Surge to Help Texas to Keep Its Books in Balance


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Keeping the books of the state of Texas balanced can be something of a challenge. The past session of the Texas Legislature balanced the 2018-19 budget, albeit barely. The next session, due to start in a year, is going to face quite a challenge in making sure that spending matches tax receipts.

Fortunately, according to the Dallas Morning News, a surge in sales taxes will give the next session some wiggle room. A number of factors are contributing to the increase.

First, the economy has started picking up, especially in the Texas oil and gas industry. As more economic activity occurs, more goods and services are bought and sold, and Texas gets its cut.

Second, somewhat
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ironically, the rebuilding effort as a result of Harvey is contributing to the boost in sales tax receipts. Homeowners and insurance companies paying to recover from the massive flooding that occurred from the storm are buying an impressive amount of building materials, further fattening the state's coffers.

Finally, the holiday shopping season appears to have been more robust than expected. Texas gets a part of the cost of every present bought.

The surge in sales tax receipts offers some hope that the next session of the legislature will not be faced with the painful choice of either cutting services or raising taxes, at least too much. Texas prides itself in both its adherence to fiscal austerity and its low taxes. The approach has made the Lone Star State an attractive place in which to live and do business, but it can be challenging for state lawmakers, who have to pay the bills.

Complicating matters is the fact that a percentage of Texas' sales tax revenues has been dedicated to highway construction. The move, made in 2015, means that there is less revenue available for the general fund that pays for everything else, from prisons, to schools, to health care programs.

AUTHOR: Jake Posey

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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