HARLINGEN — Texas sales tax revenues drooped downward in April, as the shutdown of retail and service industry outlets and shelter-at-home orders due to coronavirus began to bite.
Sales tax revenue for April was down 9.3 percent from a year ago, the steepest one-month decline since the Great Recession era in January 2010.
The numbers are expected to get worse in the next two months, since these revenue figures are primarily from sales made in March and remitted to the Texas Comptroller’s Office in April.
“State sales tax collections declined as a result of efforts to stem the spread of COVID-19 through business closures, crowd limits and stay-at-home orders adopted in the state, as well as a precipitous drop in worldwide demand for oil,” State Comptroller Glenn Hegar said.
“The steepest declines in tax remittances were from businesses most quickly and dramatically affected by social distancing: restaurants, performing arts venues, movie theaters, theme parks and fitness centers, as well as department stores and boutique retail shops,” Hegar added. “However, those losses were, to a degree, offset by increases from big-box retailers, grocery stores and online vendors. Remittances from oil- and gas-related sectors also fell significantly as oil and gas exploration and production companies slashed capital spending in response to the crash in oil price.”
Sales taxes are the single largest source of state funding for the state’s budget, accounting for 57 percent of all tax collections.
They also are a significant contributor to the annual budgets of Texas municipalities.
The sources of sales tax revenue affected the most by the shelter-at-home orders and business shutdowns provide some insight into the industries hit hardest by the recent months of response to the COVID-19 virus.
For example, motor vehicles sales and rental taxes statewide were $164 million, down 45 percent from a year ago, and the largest one-month drop on record going back to 1993.
Motor fuel taxes, gasoline and diesel, totaled $284 million, down 12 percent from April 2019, the steepest one-month drop since 1991.
Natural gas production taxes totaled $67 million for the month, down 48 percent from a year ago.
The hotel occupancy tax totaled $24 million, down 63 percent from a year ago, the steepest one-month drop going back to 1990.
Alcoholic beverages taxes totaled $57 million for the month, down 55 percent from a year ago. Declines were driven by drops in mixed beverage gross receipts and sales taxes, both of which were down more than 58 percent.
Excise taxes on beer were up 16 percent from April 2019, while wine excise taxes were up 9 percent from a year ago.