PAUL J. WEBER, Associated Press
AUSTIN, Texas (AP) — Incoming Lt. Gov. Dan Patrick said Monday that an oil and gas industry slowdown won’t cause Republican leaders to shelve promises of serious tax relief despite plunging energy prices that are complicating the Texas budget outlook.
Oil prices briefly fell below $50 a barrel Monday for the first time since 2009. But Patrick, the strident tea party leader who ousted three-term incumbent David Dewhurst last year behind a campaign that pledged lower taxes, said he remains undeterred.
“Let there be no doubt — there will be tax cuts,” Patrick said.
He then vowed to not let a budget pass the Senate otherwise, though he wouldn’t provide details about what form tax relief might take.
The Texas Legislature reconvenes next week, and both the House and Senate are newly infused with like-minded tea party members who ran on promises of lowering property taxes for homeowners and reducing tax burdens on businesses. The campaign season overlapped the Texas energy boom that has flushed state coffers with extra cash.
But forecasts have changed since Election Day.
Rising production outside of OPEC, especially in the U.S., boosted supplies just as weakness in the global economy slowed the growth in oil demand. Although sales tax collections in Texas hit a record high in November, Patrick acknowledged that the growth has been partly fueled by drillers buying equipment.
Budget observers say Texas’ economy remains in good health, but they still expect the falling prices to take a toll.
Dale Craymer, a former state budget official who now heads the business-backed Texas Taxpayers and Research Association, predicts that lawmakers will begin a new 140-day session on Jan. 13 with a budget surplus of $5 billion to $6 billion.
Ambitious plans to ease congested Texas roads and more border security are among the spending priorities that Republican Gov.-elect Greg Abbott and other lawmakers have identified. Craymer said the drop in oil prices will cast a shadow over some of those plans.
“With less cash in hand it doesn’t take property tax relief off the table, but it probably means whatever relief is provided is going to be less meaningful,” he said.