HARLINGEN — The Texas economy came roaring back in June, with state sales tax revenue hitting $2.98 billion, a 4.3 percent increase over the same month in 2019.
Most of this sales tax revenue is based on sales made in June and collected in July. The strong showing most likely reflects the widespread easing of social distancing and business shutdowns that month.
“State sales tax collections in July were better than expected, increasing despite the high unemployment due to the pandemic,” state Comptroller Glenn Hegar said. “The increase was due to a surge in collections from the retail trade sector; receipts from other major sectors — including mining, construction, wholesale trade, services and restaurants — showed significant declines.”
Not surprisingly, online sales were up significantly for the month as Texans still anxious about going in and out of brick-and-mortar stores ordered from home.
“Also, more online marketplace and remote vendors are required to collect and remit Texas tax following the Wayfair decision and subsequent legislation passed last session,” Hegar said. “Increased time spent at home both for teleworking and staycations, in lieu of leisure travel, spurred sharply higher spending for home improvements.”
Hegar’s office reported food and beverage stores had a strong month as consumers replaced alcohol purchases at restaurants with liquor, wine and beer purchased at off-premise locations.
“Collections from sporting goods stores also rose significantly, as consumers turned to home workouts, bicycling, boating, camping and other forms of outdoor recreation consistent with social distancing,” he said.
Around 1.3 million Texas workers are receiving jobless benefits, but Hegar said the extra federal dollars allocated under the Pandemic Unemployment Assistance program provided a major boost even for unemployed workers to enable some spending, he said.
As it stands now, those extra benefits which totaled about $600 per week in addition to regular Texas unemployment ended in July.
Still, overall spending reflected in sales tax revenues over the past three months was still down 5.3 percent compared to the same period a year ago.
Looking at the revenue breakdown, Texas collected $466 million from motor vehicles sales and rentals, down 3.7 percent from a year ago.
Motor fuel taxes totaled $304 million, down 2.2 percent, the oil production tax brought in $187 million, down 40 percent from a year ago, and the natural gas production tax totaled $37 million, down 71 percent.
In other categories, the hotel occupancy tax brought in $34 million, down 42 percent, and the alcoholic beverage tax totaled $110 million, down 6.2 percent.