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<br />
<br />Growth of Selected Tax Revenues *
<br />Percentage Change from Previous Biennium 32.0%
<br />1986-87 1988-89 1986-87 1988-89 1986-87 1988-89
<br />Value-Based Taxes Oil and Gas Taxes Quantity-Based Taxes
<br />SOURCE: Rob Bullock. Comptroller of Public Accoums, *Projecled
<br />
<br />
<br />the Texas economy gathers
<br />strength,
<br />In general, sales tax collections
<br />track trends in consumer spend-
<br />ing and business investment in
<br />equipment.
<br />In 1986 consumers paid an es-
<br />timated 54 percent of state sales
<br />tax. Consumer spending depends
<br />on the general health of the
<br />Texas economy and on people's
<br />confidence in the future,
<br />The other estimated 46 percent
<br />of sales tax receipts comes from
<br />purchases by businesses of tax-
<br />able items like building materials,
<br />oil-field or other industrial ma-
<br />chinery and utilities for commer-
<br />cial use,
<br />But the companies that buy the
<br />lion's share of these items--oil
<br />and gas firms, construction com-
<br />panies and manufacturers--are
<br />the weakest industries in the
<br />Texas economy today and will be
<br />in the future. This weakness will
<br />be the heaviest drag on state sales
<br />tax collections in 1988-89.
<br />
<br />988-89. State sales tax receipts
<br />are expected to reach $9.3 billion
<br />for the 1988-89 biennium--2.5
<br />percent above their 1986-87
<br />level.
<br />Sales tax receipts are expected
<br />to fall five percent in 1988, after
<br />the temporary rate increase ex-
<br />pires. Then in 1989 receipts are
<br />expected to grow 5.6 percent as
<br />
<br />Tax Receipts by Source
<br />Total state tax receipts are ex-
<br />pected to be $20 billion in 1988-
<br />89 compared to an estimated
<br />$20.6 billion in 1986-87.
<br />Tax receipts are projected to
<br />fall to $9.7 billion in 1988, after
<br />the 1987 temporary tax increases
<br />expire August 31, 1987, Then re-
<br />ceipts will increase to $10.3 bil-
<br />lion in 1989 as the Texas econo-
<br />my improves,
<br />Six taxes--the sales tax, the
<br />motor fuels taxes, the franchise
<br />tax, the motor vehicle sales tax,
<br />the natural gas tax and the oil
<br />production and regulation taxes--
<br />are projected to account for 85
<br />percent of total state tax collec-
<br />tions in 1988-89.
<br />Each tax follows its own
<br />unique path of growth--changes
<br />in each tax are linked to the per-
<br />formance of particular industries
<br />within the state economy.
<br />
<br />Price.y
<br />
<br />
<br />Taxes and Oil
<br />
<br />$16.
<br />
<br />per Barrel)
<br />
<br />$15.37
<br />
<br />:U.07S : '$1-.003
<br />~---_._------- . --- - -- -
<br />
<br />$15.11
<br />
<br />n
<br />
<br />$2.163
<br />
<br />
<br />
<br />$1~548
<br />
<br />$20.56
<br />
<br />Sales Tax
<br />The sales tax is the state's most
<br />important source of revenue and
<br />will account for an estimated 47
<br />percent of total tax receipts in
<br />
<br />Continued on page 6
<br />
<br />January 1987, FISCAL NOTES--S
<br />
<br />Tax
<br />
<br />
<br />Motor Fuels Taxes
<br />Taxes on the sale of gasoline,
<br />diesel fuel and liquefied petro-
<br />leum gas are expected to be the
<br />state's second-biggest tax source
<br />in 1988-89. But these taxes will
<br />raise less money than they did in
<br />1986-87.
<br />
<br />Percentage of Consumer Spending
<br />and Sales Tax on Services
<br />Fiscal /986
<br />Consumer
<br />Spending
<br />o Services' Share
<br />o All Other
<br />SOURCE: Bob Bullock. Comptroller of Public Accounts,
<br />
<br />1 989J
<br />
<br />hillf of 1986 and $14,0 I per harrel in the
<br />
<br />1988,'
<br />
<br />"
<br />
<br />1,9~7~
<br />
<br />per barrel in the lirs
<br />
<br />'{986
<br />
<br />'.-. -1985
<br />
<br />'Oil price averaged $26,76
<br />second half of 1986,
<br />'Projected
<br />SOURCE: Roh Bullock.
<br />
<br />Biennial
<br />Revenue
<br />
<br />Continued
<br />During 1988-89 natural gas
<br />prices--forecast to average $1.50
<br />per mcf--are expected to follow
<br />the same level path as oil prices.
<br />Gas and oil prices will move to-
<br />gether because many industrial
<br />fuel users--utilities, for instance--
<br />can now switch easily between
<br />gas and oil, making the two al-
<br />most perfect substitutes for one
<br />another.
<br />These relatively stable gas pric-
<br />es will be accompanied by unusu-
<br />ally large declines in production.
<br />In fact, by 1989 Texas produc-
<br />tion will have fallen 18.2 percent
<br />below 1986 levels. Reduced drill-
<br />ing in response to low gas prices
<br />will underlie the production
<br />declines.
<br />
<br />Comptrollcr of Public Accoums,
<br />
<br />Accuracy of Biennial Revenue Estimates
<br />of General Revenue Income, 1947-1985
<br />(Amounts in Millions)
<br />
<br />J
<br />.
<br />I
<br />,
<br />i
<br />
<br />Percentage
<br />Error
<br />
<br />-55,9%
<br />-22,9
<br />-76,3
<br />-33,7
<br />-46,6
<br />-25.4
<br />-50,5
<br />-51,1
<br />-13.4
<br />-12,5
<br />-16,0
<br />-20.6
<br />-22.1
<br />-12,1
<br />-12.0
<br />- 4,5
<br />- 4,0
<br />- 3,1
<br />0,2
<br />3,5
<br />
<br />Dollar Error
<br />
<br />$-179.5
<br />- 94,9
<br />-257,9
<br />-125,3
<br />-206.5
<br />-122,5
<br />-272,8
<br />-521.4
<br />-170,7
<br />-180,8
<br />-298,5
<br />-590.4
<br />-867,7
<br />-635.8
<br />-837,9
<br />-401.0
<br />-473,2
<br />-752,5
<br />69,1
<br />768,5
<br />
<br />Actual
<br />
<br />321.1
<br />414,9
<br />338,0
<br />371.7
<br />443,0
<br />483,1
<br />540,5
<br />1,019,7
<br />1.276,0
<br />1,450,2
<br />1.865,9
<br />2,867,1
<br />3,922,9
<br />5,246.5
<br />6,995,9
<br />8,951.0
<br />11,730,8
<br />24,504,5
<br />28,004,8
<br />21.881.8
<br />
<br />$
<br />
<br />Estimate
<br />
<br />141.6
<br />320,0
<br />80,2
<br />246.4
<br />236,5
<br />360,6
<br />267,7
<br />498,3
<br />1.105,3
<br />1,269.4
<br />1.567,3
<br />2,276,7
<br />3,055,2
<br />4,610.7
<br />6.158,0
<br />8,549,2
<br />11.257.6
<br />23,752,0
<br />28,073,9
<br />22,650,3
<br />
<br />$
<br />
<br />Date
<br />
<br />947
<br />949
<br />951
<br />952
<br />954
<br />956
<br />959
<br />961
<br />963
<br />965
<br />967
<br />969
<br />971
<br />973
<br />975
<br />976
<br />978
<br />980
<br />983
<br />9851
<br />
<br />the estimates used toeertify Ihe General Ap-
<br />
<br />Calculated from
<br />
<br />'Firstlwo years of thee slim ate only
<br />propriations Act.
<br />
<br />Oil Taxes
<br />In 1988-89 oil production and
<br />regulation taxes will be the state's
<br />sixth-biggest source of tax reve-
<br />nue, In 1984-85 these taxes
<br />ranked third,
<br />Total oil tax receipts in 1988-
<br />89 are expected to be $943
<br />million--down 23 percent from
<br />$1.2 billion in 1986-87 and down
<br />56 percent from $2,2 billion in
<br />1984-85.
<br />Like the gas tax, the oil pro-
<br />duction tax is based on the value
<br />of production. Price and quantity
<br />dictate how much money the tax
<br />brings in.
<br />Today, and in the future, de-
<br />clining production will be the
<br />major cause of falling oil tax re-
<br />ceipts. Low prices are discourag-
<br />ing exploration and forcing pro-
<br />ducers to shut in marginal wells,
<br />At the end of the summer of
<br />1986, Texas was losing 250,000
<br />barrels of taxable production a
<br />day--IO times the rate of one year
<br />ago.
<br />This lost production--especially
<br />from stripper wells--may never
<br />come back, and the discovery of
<br />big new fields is unlikely.1'J
<br />
<br />SOURCE: Boh Bullock. Comptroller of Public Accounts.
<br />
<br />987
<br />
<br />8--FlSCAL NOTJ,:S. Januar~'
<br />
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