AUSTIN, TX — “The fundamentals of the Texas economy remain strong. The agency is monitoring weakness in financial markets, including commodities and energy markets. We have been tracking revenues carefully since markets began to soften," wrote Glenn Hegar, the Comptroller of Texas in the press statement today.
The Comptroller is responsible for executing the biennial budget where the State is slated to spend $250.7 billion. That budget assumes a certain amount of revenue to the State in collected sales taxes and taxes on energy production. The price of oil from West Texas, tracked as West Texas Intermediate crude, or WTI, plunged to a very low $30.97 per barrel today. CNN reported that oil "suffered their biggest fall since the day in 1991 when American forces launched air strikes on Iraqi troops following their invasion of Kuwait."
"Certainly, Texas has exposure if oil prices remain depressed for a sustained period of time, and slowdowns in economic activity related to the COVID-19 outbreak could also be a headwind. We are still only six months into the current budget cycle, however, and it is too early to tell with certainty how current fluctuations will impact long-term economic performance and state revenues," Hegar continued.
"As I have said before during significant downturns in energy prices, the Texas economy is less reliant on severance taxes to fund the day-to-day functions of state government than it has been historically. In addition, the state leadership has numerous financial management tools that allow the state to react to and contend with economic pressures. Having said that, we will continue to monitor the economy and state revenues closely and will provide updates to lawmakers and the public as conditions warrant,” the Comptroller concluded.