Comptroller Glenn Hegar, conceding that he had been too bullish about oil prices and the economy, said Tuesday that Texas will take in nearly $5 billion less in this budget cycle than he forecast in January.
But Hegar stressed that by August 2017, the state should have about $4.2 billion more in general-purpose revenue than needed to pay for the budget that lawmakers passed this year.
“The budget is still fine,” he said in an interview, shortly before issuing a report summing up the fiscal year that ended in August and projecting the next two. It certified that state revenue will cover all of the Legislature’s spending bills.
Hegar, a former GOP lawmaker who is in his first year as the state’s chief tax collector and revenue estimator, said he wanted to issue the report early.
Lower oil prices “definitely” have persisted long enough to require him to lower his biennial revenue estimate, issued in January, “so let’s go ahead and update,” he said.
In January, Hegar forecast that the price of oil would recover from a plunge late last year, hovering between $65 and $70 a barrel throughout the current budget cycle. He has had to walk that back. In his new report, Hegar said he expects the world price of oil to average just under $50 this year and go up to nearly $57 in fiscal 2017.
The earlier estimate overshot what severance taxes would yield by $3.1 billion for the cycle. In a reflection of how the “fracking” boom stimulated sales tax revenue, he also has had to contract his two-year forecast of sales tax collections by $1.6 billion.