State sales tax collection improves, off just 6.5 percent

HARLINGEN — Sales taxes collected by the state were at $2.67 billion in the June report, a 6.5 percent drop from the total collected a year ago.

Although down, this number for sales taxes mostly collected during May is a significant improvement over the previous month, when total sales tax collected was $2.61 billion, down 13.2 percent from the previous year. That marked the steepest year-over-year decline since January 2010.

Texas Comptroller Glenn Hegar attributed the improvement in the numbers to business shutdowns and social-distancing rules being eased during the month of May.

The negative in the latest report, Hegar said Wednesday, were “steep drops in remittances from oil- and gas-related sectors. Collections from the construction and amusement service sectors were also sharply down.”

Hegar said sales tax collections from restaurants also were down for the month, but he said the extent of the downturn was checked somewhat by restaurants turning to increased takeout and delivery sales.

“Retail trade receipts rose significantly, buoyed by increased online shopping and building material purchases, as business premises were modified for COVID-19 precautions,” Hegar said.

“Retail sales likely also were boosted by increased alcoholic beverage sales at package, grocery and convenience stores,” he added. “That’s because this category of spending shifted from restaurant and bar on-premise consumption, subject to mixed beverage taxes, to purchases for at-home consumption subject to sales tax. Increased spending by businesses to facilitate teleworking resulted in higher tax collections from vendors of computer hardware and software products.”

Total sales tax revenue for the three months ending in June 2020 was down 9.7 percent compared to the same period a year ago. Sales tax is the largest source of state funding for the state budget, accounting for 57 percent of all tax collections, but the effects of the economic slowdown and low oil prices also were evident in other sources of revenue in June 2020.

In other tax revenue categories, motor vehicle sales and rental taxes were down 7.6 percent from a year ago at $394 million.

Motor fuel taxes, perhaps reflecting stay-at-home directives and reduced tourist travel, were down 24 percent at $250 million.

Natural gas production taxes were $20 million, down 84 percent from last year, and oil production taxes were down 77 percent at $83 million.

The hotel occupancy tax was down 61 percent for the month at $23 million, and alcoholic beverage taxes were $65 million, down 47 percent, although significantly better than in the previous month’s report.