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Economic growth and inflation contributed to Texas collecting $841 million more in taxes this fiscal year than what was projected, state Comptroller Glenn Hegar announced Thursday.
The state collected $77.2 billion in taxes, a 25.6% increase from the previous fiscal year, the comptroller’s office said in a news release.
Sales tax revenue totaled about $43 million, a 19.3% increase from fiscal year 2021.
“Over the last many months, economic growth and inflation have driven higher sales tax collections as demand remains strong and businesses and consumers continue to pay elevated prices for goods,” Hegar said in a written statement.
Although the comptroller’s office also reported significant increases in revenue from motor vehicle and franchise taxes, collections from natural gas and oil production saw the largest percentage-increase from the last fiscal year.
Tax revenue from oil production was $6.4 billion, an 84.4% increase. The state collected $4.5 billion in natural gas production taxes, which represented a 185% increase from the previous fiscal year.
Revenue from natural gas and oil production feed into the state’s Economic Stabilization Fund and its highway fund. The comptroller said $3.64 billion will be put into each of the funds, a 60% increase from fiscal year 2021.
The state also saw a 13% year-to-year increase in sales tax last month, according to the comptroller’s office. Sales tax revenue for a given month largely consists of sales made in the previous month.
Last month, the comptroller’s office reported that it had collected $3.88 billion in sales tax in July, setting a record for monthly sales tax collections. Sales tax in August was slightly less than $3.8 billion.
“The strong growth in August came from receipts remitted by the oil and gas mining sector, which were up by nearly 80 percent compared with a year ago,” Hegar wrote, adding that construction, manufacturing and wholesale trade sectors have also sen continued growth.
The state set a record for monthly tax revenue from motor vehicle sales and rental taxes with $651 million. Collections from sporting goods, hobby, clothing and accessories stores were down slightly year-to-year, Hegar said.
Motor fuel tax collections, an indicator of fuel demand, was down about 3% from August 2021.
In July, Lt. Gov. Dan Patrick said that he would support suspending state gas taxes through the end of the year as part of a larger effort to return surplus money to taxpayers, a move that some economists called a “terrible idea.”
Waco-based economist Ray Perryman said record production in oil and gas sectors stimulated tax revenue. COVID-19 stimulus packages and the economy’s recovery from the first year of the pandemic also contributed to increased spending, he added.
Increased revenues gives the state a “unique opportunity to invest in education, infrastructure, health care and other critical areas needed to support long-term, sustainable growth,” Perryman said.