By: Dr. M. Ray Perryman
Published in syndication November 23, 2022
Every year, the Texas Comptroller of Public Accounts prepares a document detailing the financial status of the State of Texas. The 2022 report (for the fiscal year ended August 31) was recently released. It paints an interesting picture that is well worth exploring.
Net revenues increased by $12.8 billion (7.5%) over 2021 and totaled $183.3 billion. Net expenditures for all funds were up $15.2 billion (10.4%) to reach $161.8 billion. Texas ended fiscal 2022 with a cash balance in the State Treasury of $33.7 billion, which is well over double the prior year.
The primary reason for the increase in revenue was that tax collections (the largest revenue category) increased by $15.7 billion (25.6%) to reach $77.2 billion. Within that category, sales taxes – which represent 55.7% of total taxes and 23.4% of total revenue for the state – rose by 19.3%. Other important taxes were also higher, including motor vehicle sales and rental taxes (up 12.5%), oil production taxes (up a whopping 84.4%), franchise tax (up 25.2%), and natural gas production taxes (lurching upward by 185.0%). The energy sector also generates notable royalty income including almost $4.0 billion in 2022.
Federal income, the second largest revenue category, actually decreased $9.2 billion (11.2%) as the various COVID-19-related payments waned. Most of the federal money goes to medical aid and public assistance programs, education, and highways.
On the expenditure side, public assistance payments ranked as the largest category with 43.1% of the total; these outlays were $69.8 billion in fiscal 2022, up 18.6%. Looking at it by function, health and human services (which includes the public assistance payments and Medicaid) is the largest. Education is second largest, totaling $49.5 billion in fiscal 2022, a $4.6 billion (10.4%) increase over fiscal 2021. Other large expenditure categories include highway construction and maintenance, salaries and wages for state employees, employee benefits, and various goods and services.
The bottom line is quite simple. As the economy continued to recover from the pandemic, taxes increased. With the energy sector seeing a surge in response to higher global demand and events such as the Russia-Ukraine conflict, oil and gas production taxes (and royalties) also rose dramatically. Federal income was down some as pandemic-related programs ended. The State spent more to help people with basic needs and boosted education funds.
There's quite a bit of money in the bank for the legislature to divvy up next spring. Education and infrastructure need to be prioritized, as does spending for programs crucial to some of the state's most vulnerable residents which even pay for themselves over time (food banks, indigent care, and home health to name but a few). The State is on solid financial ground. That's good news! Stay safe!
- Tags: comptroller estimate, expenditures, tax, Texas