Texas revenue growth slowed again in fiscal 2024

Texas general fund revenue growth slowed further in fiscal 2024, inching up just 1.1% to $83.78 billion, the state comptroller reported on Tuesday. 

Sales taxes, the biggest state-generated revenue source for the Texas budget, brought in $47.16 billion in the fiscal year that ended Saturday, a 1.2% increase from fiscal 2023. All-funds revenue fell 3.6% to $181.12 billion. 

Total revenue was largely in line with expectations, according to Texas Comptroller Glenn Hegar. 

“The tax revenue results reflect the decline in general price inflation and a slowing in the rate of growth in economic activity, as well as lower natural gas prices,” he said in a statement. “For non-tax revenue, lower-than-expected receipts from the federal government were offset by higher-than-expected interest income.”

The Lone Star State has been on a revenue roller coaster since the onset of COVID-19 pandemic. General fund collections slipped 1.5% in fiscal 2020 to $56.98 billion, then rose 6.2% in fiscal 2021 to $60.5 billion, with all-funds revenue jumping 20.4% due to an influx of pandemic-related federal funding. 

General fund revenue zoomed 26.4% higher in fiscal 2022 to $76.47 billion, but only grew by 8.3% in fiscal 2023 to raise $82.84 billion. 

Oil and natural gas production tax collections have ebbed after hitting a record $10.8 billion in fiscal 2022. Severance taxes raised $9.28 billion in fiscal 2023 and $8.43 billion in fiscal 2024 as natural gas-related revenue fell sharply.

In November, the state’s economic stabilization and highway funds will each receive a fiscal 2025 deposit of $2.74 billion in severance tax revenue, down from fiscal 2024’s $3.06 billion, according to the comptroller’s office.  

The triple-A-rated state continues to enjoy a hefty surplus, which state lawmakers tapped during the 2023 legislative session for tax relief, including a huge property tax cut, and a variety of one-time uses. Hegar will release an estimate for the fiscal 2026-2027 biennium in January after skipping a July revision in the forecast for the current biennium. 

A report Tuesday from The Pew Charitable Trusts found state tax revenue nationally fell 3.2% below a 15-year trend in 2023’s fourth quarter, after adjusting for inflation and smoothing for seasonal fluctuations, with the revenue decline attributed to waning pandemic factors and widespread tax cuts. Texas was among 22 states with positive tax collections compared to their 15-year trend.