July 23, 2015 1:27 PM

Greenfield: From the Perry Period of Prosperity to the Abbott Growth Decline

Resident number cruncher Stuart Greenfield says that while Texas continues to grow economically, revenue estimates for fiscal years 2016 and 17 will likely not be nearly as rosy as had been estimated by the Comptroller

Yes, the state continues to prosper. The Federal Reserve Bank of Dallas projects economic growth will continue to be positive. But the rate of growth will be declining. Those with degrees in economics will tell you that the first derivative is positive while the second is negative.

This decline in state economic growth is already showing in the growth in state tax collections.

As Comptroller Glenn Hegar recently noted, the June state sales tax collections growth declined for the first time in 62 months. What was not mentioned by the Comptroller is that that the monthly growth rate in total tax collections has been negative for the past three months.

This has resulted in the cumulative growth in state tax collections declining to 2.2 percent through June, as shown here in Figure 1.

The 2.2 percent cumulative growth rate through June is the lowest rate since August 2010. While this rate of growth is greater than the 1.9 percent growth in the Biennial Revenue Estimate (BRE) released in January, should the rate of growth (-2.2) experienced over the last four months continue for the remainder of the fiscal year, total tax collections will still be within 1 percent of the current estimate of $51.8 billion.

The complete column from Dr. Stuart Greenfield can be found in the R&D Department.

By Dr. Stuart Greenfield, Ph.D.