Bonds

Texas sale taxes hit record in January amid slower growth rate

Sales tax collections in Texas soared to a record $4.11 billion in January, although the growth rate for the state budget’s biggest revenue source slowed.

State Comptroller Glenn Hegar reported Wednesday the 6.6% increase compared to January 2022 was the lowest “in the 22 months since the end of pandemic restrictions.”

“This reflects slowing in the rate of inflation and slowing growth in real economic activity as well,” he said in a statement. “Unfortunately, inflation continues to erode the purchasing power of Texas consumers as the consumer price index rate for December was 6.5%.”

Business spending accounted for the biggest gains, led by the mining sector, while retail receipts grew only slightly, with big box and department stores declining and dollar stores up sharply from a year ago, according to Hegar.

The majority of January sales tax revenue is based on sales made in December and remitted to the state agency last month.

Texas last reported record monthly sales tax collections of $3.96 billion in November 2022 that was up 11.2% from the prior year.

Energy production taxes slowed or fell last month, with the oil tax generating $486 million, which was 14% higher than in January 2022, and natural gas tax revenue falling 13% at $322 million.

Texas collected a record $6.36 billion in oil production taxes and $4.47 billion in natural gas production taxes in fiscal 2022 amid high demand and high prices for fossil fuels.

The strong performance of energy production and sales taxes led Hegar to forecast a record $32.7 billion budget surplus at the end of the current fiscal 2022-23 biennium.

The state’s elected officials are gearing up to tap the surplus for a big property tax cut.