SAN ANTONIO – The monthly sales tax revenue in Texas plunged 13.6% in May compared to the same month last year and restaurant reservations made via one online booking site declined by 100% from the year before as the coronavirus crisis shuttered dining rooms in March.
The bleak figures, recently released in a report by the Texas Comptroller’s Office, help give an understanding of how the pandemic crushed the state’s economy within the span of just months.
The comptroller’s office released a revised Certification Revenue Estimate that shows the impact on tax revenues from sectors like travel, retail, alcohol and beverage, and entertainment, and how the disruption caused record unemployment.
The Certification Revenue Estimate, or CRE, is released by the office after each legislative session to give lawmakers a sense of the state of the economy. As it was released after the 2019 session, it “reflected what was then one of the nation’s strongest economies,” the office said in the report.
Then the pandemic hit.
Now, according to the report, the state’s availability for general-purpose spending will be $11.57 billion, or 9.5%, less than stated in the October 2019 CRE. The $110.19 billion available for 2020-21 is .8% less than 2018-19, the report states.
“Economic output in the U.S. and Texas fell by historically large amounts in the second quarter of calendar 2020,” the report states. “Given the unprecedented nature of the economic contraction associated with actions taken to slow the spread of COVID-19, forecasting services have significantly and repeatedly revised their estimates of economic growth for this year and next.”
The comptroller’s office laid out four charts that show how the economy slid and slowly began to bounce back even as COVID-19 cases surged in Texas:
The number of passengers traveling through Texas airports dropped in the first weeks of March, according to data from the U.S. Transportation Security Administration, as presented by the comptroller’s office.
The office said in July, the number of passengers was at one-fourth of the level seen in 2019.
Plunge in restaurant reservations
The comptroller’s office states reservations at Texas restaurants declined 100% by March 21 as compared to the same time last year.
This chart was made using data from OpenTable, an online restaurant reservation company. It shows reservations dropped by the thousands in March, and slowly increased in May.
The March data coincides with the date that Gov. Greg Abbott closed dining rooms in restaurants. He allowed them to reopen at 25% capacity on May 1.
Sales tax revenues increased more than expected in July, the comptroller’s office states, but it’ll take longer in some sectors to recover.
For instance, tax revenue from travel could stay limited as events become canceled, destinations stay closed in some states, or if COVID-19 hot spots emerge.
“Just how reluctant people are to resume crowded activities will affect tax revenue from restaurants, bars and sporting events,” Tom Currah, the chief revenue estimator, said in the report. “We didn’t expect that these activities would return to pre-pandemic levels in this biennium, and our forecast reflected that assumption.”
The comptroller’s office states the variation in sales tax revenue shows how Texans adjusted their spending over the summer.
For instance, e-commerce collections sharply rose as consumers shifted mainly online, and sales tax on sporting goods increased with more people working outside or at home. The comptroller’s office also stated consumers spent more money on home improvement projects.
“We have to consider human behavior,” Texas Comptroller Glenn Hegar said in the report. “Even when restrictions are lifted or loosened, when will people feel safe going to the movies again? When will they feel comfortable packing into stadiums or attending conferences and conventions? It’s difficult to predict how consumers will respond even after we begin a state of recovery.”