AUSTIN — Texas tax revenues have bounced back to levels nearly equal to pre-recession levels indicating that the economy is in recovery, the state's chief revenue estimator said Wednesday.
John Heleman said taxes on retail sales, motor vehicles and oil production are near 2008 levels, the last year before the recession. Only natural gas taxes are lagging, mostly due to low prices, he said during a quarterly briefing to the state House Ways and Means committee.
"The sales tax collection in 2008 was our all-time high and then it went down in 2009," Heleman told the committee. "It's back up in 2011, and we're essentially back to where we were in 2008 in terms of sales tax collections."
The state's Rainy Day Fund, which is financed with oil and gas revenues, is expected to reach roughly $7 billion by the next legislative session in 2013, Heleman added.
The state's business tax, also known as the franchise tax, also is recovering, though not yet to 2008 levels. Heleman said the Legislature's decision to raise the exemption level to $1 million from $300,000 earlier this year means that more than 40,000 businesses will no longer have to pay the tax. That will cost the state about $150 million in lost revenues over the next two years.
Oil production in the state has remained steady over the last 20 years, with a slight increase in recent months, Heleman said. But the price of oil has varied dramatically, resulting in steep changes in tax collections. He said high prices for oil have benefited the state's treasury, returning state income from oil to near 2008 levels.
Natural gas prices, though, remain low and revenue from those wells has not returned to 2008 levels and probably will not in the foreseeable future, he added.
Committee Chairman Harvey Hilderbran, R-Kerrville, said the committee will meet again next month to discuss the business tax, which was created in 2006 to help lower property taxes. That tax has never performed as well as expected, creating a recurring deficit every two years. Hilderbran said the committee will ask experts to delve deeper into the tax to see what can be done to make it more effective.