BIENNIAL REVENUE ESTIMATE REVENUE VOLATILITY January 2019 Glenn Hegar Texas Comptroller of Public Accounts
Revenue Available for General-Purpose Spending BIENNIAL REVENUE ESTIMATE 2020-21 2018-19 + In Billions of Dollars $107.32 General Revenue-Related (GR-R) $99.27 Tax Collections + $14.16 $14.55 Other GR-R Revenue = $121.48 SUBTOTAL Total GR-R Revenue $113.82 + $4.18 $1.94 Beginning Balance = $125.67 Total GR-R Revenue SUBTOTAL $115.77 & Fund Balances _ Revenue Reserved for Transfers $6.34 $5.57 to the Economic Stabilization and State Highway Funds _ $0.21 $0.00 Amount Needed for Transfer to the Texas Tomorrow Fund* = Total Revenue Available for $119.12 TOTAL $110.20 General-Purpose Spending * The original, constitutionally guaranteed prepaid tuition program is projected to have a cash shortfall of $211 million in the 2020-21 biennium. The BRE assumes the shortfall will be paid from general revenue. Note: Totals may not sum because of rounding. Glenn Hegar Texas Comptroller of Public Accounts
Sources of General Revenue-Related Revenue for 2020-21 BIENNIAL REVENUE ESTIMATE STATE TAX REVENUE 8.1% Motor Vehicle Sales & Rental Taxes 6.1% Oil Production Tax Sales Taxes 54.5% 5.0% Franchise Tax 2.7% Natural Gas Production Tax 1.7% Motor Fuel Taxes 10.2% All Other State Taxes OTHER REVENUE Fees, Investments & 11.7% Other Non-Tax Revenue Glenn Hegar Texas Comptroller of Public Accounts
Sales Tax Collections, Annual Change All Funds BIENNIAL REVENUE ESTIMATE Percent Change Average Annual Change 25% 20% 15% 10% 5.05% 5% 0% -5% -10% -15% 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Glenn Hegar Texas Comptroller of Public Accounts
Severance Tax Collections, Annual Change All Funds BIENNIAL REVENUE ESTIMATE Percent Change Average Annual Change 80% 60% 40% 20% 7.1% 0% -20% -40% -60% 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Glenn Hegar Texas Comptroller of Public Accounts
Texas Rating - Five-Year History 2014 2015 2016 2017 2018 AAA Fitch Texas Aaa Moody’s AAA Standard and Poor’s AAA KBRA Energy-Related Downgrades 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 (Reliance on tax revenue from oil and gas, coal) 1 Alaska North Dakota AA+ AA State Rating - Aa3 Five-Year History AA Louisiana Oklahoma AA- AA Aa3 AA AA- West Virginia 3 New Mexico 2 AA Aa2 Aa2 AA AA- 1 Rating agencies also cited pensions. 2 Rating agencies also cited pensions, Medicaid. 3 Downgrades are due to reliance on coal-related revenue. Glenn Hegar Texas Comptroller of Public Account s
Texas Rating - Five-Year History 2014 2015 2016 2017 2018 AAA Fitch Texas Aaa Moody’s AAA Standard and Poor’s AAA KBRA Pension-Related Downgrades 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 State Rating: Alaska 1 Kentucky Five-Year History Aa3 AA Aa3 A AA Connecticut 2 Mississippi AA A+ A1 A New Jersey Illinois A BBB A3 Baa3 A- BBB- Kansas Pennsylvania 3 Aa2 AA- Aa3 AA- A+ 1 Rating agencies also cited reliance on oil- and gas-related revenue. 2 Rating agencies also cited state debt increase. 3 Rating agencies also cited structural imbalance. Glenn Hegar Texas Comptroller of Public Accounts
Tobacco Settlement - Permanent Trust Account Corpus and Distribution BIENNIAL REVENUE ESTIMATE In Billions of Dollars $3.0 $2.60 BILLION $2.5 Market Value $2.0 $1.5 $958 $1.0 MILLION $0.5 Distributions $0.0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 The Tobacco Settlement Trust Account was funded with an initial investment of $1.68 billion between 2000 and 2003. When adjusted for inflation, that amount would now be worth $2.41 billion assuming no distributions were made from the trust. Our investments have yielded a trust account with a market value of $2.6 billion (nearly $200 million more than the inflation-adjusted value would be), while at the same time making regular yearly distributions that together total nearly $1 billion from inception to date. Glenn Hegar Texas Comptroller of Public Accounts
Texas Legacy Fund Potential Distribution Projections BIENNIAL REVENUE ESTIMATE In Billions of Dollars 90% Distribution $20 $18 Median Expected $16 Distribution Cumulative Distribution $14 $12 10% Distribution $10 $8 $6 $4 $2 Biennial Distribution $0 2020-2021 2024-2025 2028-2029 2032-2033 2036-2037 Glenn Hegar Texas Comptroller of Public Accounts
REVENUE VOLATILITY BIENNIAL REVENUE ESTIMATE January 2019 comptroller.texas.gov/media Glenn Hegar Texas Comptroller of Public Accounts
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