Texans spent less going out to eat and drink, but more on home improvement as coronavirus cases peaked this summer

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Texas Comptroller Glenn Hegar discusses the Biennial Revenue Estimate for the 2020-21 biennium at the state Capitol on Jan. 7, 2019 Credit: Miguel Gutierrez Jr./The Texas Tribune

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Texas collected about $2.8 billion in state sales tax revenue in August — 5.6% less than in the same month last year, Texas Comptroller Glenn Hegar said Tuesday.

That revenue was based mainly on purchases made in July, when the number of coronavirus cases were peaking. That rising rate, the comptroller said, likely put a damper on economic activity.

State sales tax collections from major sectors — except retail trade — declined compared to the same period in 2019, Hegar said. The comptroller said the largest declines happened in oil and gas-related sectors, which includes manufacturing. A Hegar spokesperson also pointed to declines in sectors such as transportation and bars and restaurants.

In retail trade, distance learning prompted higher remittances to the agency from sporting goods, electronics and home furnishing retailers. Consumer spending also increased on home improvements and home entertainment. Such spending, Hegar said, was supported by federal benefits to help offset losses from the pandemic, which have since expired or been reduced. In July, a federal unemployment benefit expired for Texans.

"Consequently," he said in a news release, "further declines in sales tax revenue may ensue in the coming months."

Sales tax revenue is the state's single largest source of funding and feeds into the budget-writing process at the Texas Legislature, which is set to convene for a regular session in January. Since the pandemic hit the state several months ago, sales tax revenue has been mainly on the decline. But there was a slight increase in collections in July compared to the same month in 2019. Still, the state's total sales tax revenue for June, July and August this year, Hegar said, was down 2.7% compared to the same period in 2019.