Each year, the Texas Comptroller of Public Accounts produces a document detailing the finances of the state of Texas. The 2022 report (for the year ended 31 August) was recently published. An interesting picture emerges that is worth examining.
Net sales increased $12.8 billion (7.5%) to $183.3 billion compared to 2021. Net spend from all funds increased $15.2 billion (10.4%) to $161.8 billion. Texas ended fiscal 2022 with cash in the treasury of $33.7 billion, more than double the prior year.
The primary reason for the revenue increase was that tax revenue (the largest revenue category) increased by $15.7 billion (25.6%) to $77.2 billion. Within that category, sales taxes — which account for 55.7% of total taxes and 23.4% of total government revenue — rose 19.3%. Other key taxes were also higher, including motor sales and lease taxes (up 12.5%), oil production taxes (up a whopping 84.4%), concession taxes (up 25.2%) and from natural gas production (up 185.0 %). ). The energy sector is also generating notable royalty income, including nearly $4.0 billion in 2022.
Federal revenue, the second-largest revenue category, actually declined $9.2 billion (11.2%) as various COVID-19-related payments declined. Most federal money goes to health and public assistance programs, education, and highways.
On the expenditure side, social assistance benefits were the largest category, accounting for 43.1% of the total; That spending totaled $69.8 billion in fiscal 2022, up 18.6%. By function, health and social services (including public benefits and Medicaid) are the largest. Education is the second largest at $49.5 billion in FY2022, up $4.6 billion (10.4%) from FY2021. Other major spending categories include highway construction and maintenance, salaries and wages for civil servants, employee benefits, and miscellaneous goods and services.
The essence is very simple. As the economy continued to recover from the pandemic, taxes rose. As the energy sector has surged in response to higher global demand and events such as the Russia-Ukraine conflict, taxes on oil and gas exploration (and royalties) have also risen dramatically. Federal revenue has declined in part as pandemic-related programs have ended. The state spent more funds to help people with basic needs and increased funding for education.
There is enough money in the bank for the Legislature to apportion next spring. Education and infrastructure must be priorities, as must spending on programs that are critical to some of the state’s most vulnerable residents and even pay for themselves over time (food banks, care for those in need, and home health care, to name a few to name). The state is on a solid financial basis. That is good news! Take care!
Dr. M. Ray Perryman is President and CEO of The Perryman Group (www.perrymangroup.com), which has served more than 2,500 clients for the last four decades.