February 03, 2015

Glenn Hegar vs #TxLege on oil prices, tax cuts, more

Pumpjacks near Watford City, North Dakota
AP/Eric Gray via Houston Chronicle
A few members of the Texas Senate aren't ready to pull the trigger on major new tax cuts.

And, they shouldn't be.

If Texas is going to lose 300,000 oil and oil-related jobs before the current oil price slump is over, the state's going to lose a lot of oil and gas revenue, plus sales tax money from people spending less, plus new unemployment claims and more. As the story notes, 8.5 percent of all Texas jobs added since the Great Recession are directly in the oil business.
"I think it's safe to say the Eagle Ford and the Permian are about to get clobbered," (economist Karr) Ingham said, referring to areas in South and West Texas that boomed as technological advances have driven a five-year surge in production from dense shale rock.

Unfortunately, that sounds about right. 

Ingham goes on to say that he doesn't expect a permanent rebound any time soon. In fact, he expect it to take a full year for US production to cut enough to soak up all the current surplus.

So, Chris Tomlinson's right, too. Don't expect the current brief uptick in oil prices to signal something permanent.

That, in turn, gets back to those tax cuts.

All of the "concerneds" are mentioning spending priorities, not revenue concerns related to the oil patch. But, they should be looking at that.

Per Tomlinson's link, even if the oil industry is lucky to hit the higher side and average $60/bbl this year, that's still seemingly below what new Comptroller Glenn Hegar is using for his revenue estimates, which I've critiqued, time, and time, and time again.

Beyond possible additional road spending, Kevin Eltife is right for a Republican — the state's likely going to need more money for public schools, assuming it eventually loses its appeal of John Dietz's ruling on the unconstitutionality of current school finance.

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