The Texas oil and natural gas industry is making its presence felt through a currently diminished contribution to Lone Star State coffers because of the commodities price rout and industry downturn. However, tax collections from oil and gas activity are expected to be on the upswing.

“Ongoing weakness in activity related to oil and natural gas has been a drag on state economic growth and led to lagging revenue collections in 2016,” Texas Comptroller Glenn Hegar said Monday. “Still, the diversity of the Texas economy has allowed for slow but continued economic expansion and steady growth in employment, which we expect to continue over the coming biennium. Texas stands in contrast to other states with large energy industries, many of which have suffered declines in employment and economic output.”

Hegar said the state is projected to have about $104.9 billion available for general purposes during the 2018-2019 biennium. This is a 2.7% decrease from the 2016-2017 period. While revenue is expected to grow, this is being offset by a lower account starting balance and the commitment of $5 billion of sales tax revenue to the State Highway Fund beginning in the 2018-2019 period, the comptroller said.

The oil and natural gas industry is expected to contribute more during the 2018-2019 period.

“Oil production tax collections are projected to generate $4.7 billion in the 2018-2019 biennium, a 32.3% increase from $3.6 billion generated in the current biennium; natural gas tax collections in the 2018-2019 biennium are expected to be $1.7 billion, 27% more than the $1.3 billion collected in 2016-2017,” Hegar’s office said.

Texas Oil & Gas Association President Todd Staples said Monday that as goes Texas oil and gas, so goes the state budget to a large extent.

“While more diverse than in the past, the Texas economy unmistakably depends on a strong oil and natural gas industry and the billions of dollars in annual tax revenue paid by the industry to fund schools, roads and essential services,” Staples said. “When times are tough in the oil and natural gas sector, times are tough for the Texas budget.”

State revenue from all sources and for all purposes is expected to reach $224.8 billion for the 2018-2019 biennium, including $74.9 billion in federal receipts, along with other income and revenues dedicated for specific purposes and therefore unavailable for general-purpose spending, according to Hegar’s office.

“While our state revenues were down in 2016 and we face some difficult decisions in the coming months, Texas remains fiscally healthy,” Hegar said. “Despite energy-related headwinds, Texas has gained 210,000 jobs in the last year, and while our gains have not been at the same rapid rate as a few years ago, it is important to note that we have added jobs in 19 of the last 20 months. We have also seen signs of possible improvement in recent months, with some modest acceleration in job growth and oil prices and rig counts rising. And December brought the best monthly sales tax revenue collections since May 2015.”