Nothin’ but good times ahead, though, right?
Transportation funding could take a hit under new revenue projections by State Comptroller Glenn Hegar, who on Tuesday lowered his forecast of state tax collections by $4.6 billion in the face of a volatile oil and gas industry.
Hegar’s new forecast still leaves more than enough money to pay for the overall spending plan approved by lawmakers for the two-year budget period that began Sept. 1. Legislators left funds on the table and ended up with a bigger-than-expected balance when the state closed out the last fiscal year.
The new projection, however, affects the funding expected to be available for the high priority of addressing Texas’ congested roads. It lowers the oil and gas revenues anticipated to be funneled into transportation by $685 million.
“The reality is oil prices have continued to stay lower than what they were projected back in January,” Hegar said in an interview, adding that volatility in the industry makes forecasting difficult.
“We’ve sat down with different major companies and we’ve said, ‘OK, what’s the oil price?’ And boy, they are like a bunch of crawfish,” Hegar said. “It’s impossible to truly predict what the future holds, especially in this volatile commodity.”
In January, Hegar had anticipated the price per barrel of oil would be $64.52 in the 2016 fiscal year that started Sept. 1 and $69.27 in 2017. His Tuesday estimate lowers that to $49.48 and $56.52, respectively.
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The budget approved by lawmakers this year totals about $209.4 billion in state and federal funds, of which more than $106 billion is state general-purpose spending.
In January, Hegar predicted that lawmakers would have $113 billion in state revenue available for general-purpose spending for the 2016-2017 budget period that began Sept. 1, and that tax collections would total about $97.8 billion.
On Tuesday, Hegar lowered his forecast of the revenue available for general spending to $110.4 billion and projected that tax collections would total about $93.1 billion.
The reduced projection of tax collections is separate from lawmakers’ decision to slash the state business tax, Hegar said.
It should be noted that the Lege underspent its original two-year revenue projection by about $18 billion. One could say that was prudent fiscal management, and one could say that it was excessively penurious at a time when there are many unmet needs, and one would have a claim to being right in each case. All I know is that for all the bragging our state leaders like to do about what economic geniuses we are here, a lot of it still comes down to good geological luck and the whims of the world energy market. Keep your seatbelts fastened, it’s unlikely to get any smoother in the near term.