Kate Alexander | The Austin American-Statesman

Texas’ economy seems to have turned a corner, but the improvement won’t be enough to avoid a significant shortfall next year, top budget officials said Monday.

John Heleman, the comptroller’s chief revenue estimator, said Texas is beginning to add jobs, and he expects sales tax collections to pick up later this year.

In February, the state’s sales tax collections were down 8.8 percent over the same month a year earlier. Though still a negative number, it is better than the 14 percent decrease seen the previous month.

“One month certainly doesn’t make a trend, but it is encouraging to see that we are beginning to move in the right direction,” Heleman said.

The state’s sales tax revenue collection is an important indicator of Texas’s fiscal health because that money fills more than half of the state’s general revenue fund.

Even so, the state’s budget shortfall is expected to be billion at a minimum and could reach as high as billion, John O’Brien, the executive director of the Legislative Budget Board, told the House Appropriations Committee.

The higher estimate includes more than billion in additional needs for the current budget. Among those costs are higher than expected employee health care costs and Medicaid caseloads that are far exceeding projections.

Last month, agencies submitted budget reduction plans that total .7 billion in possible savings. A decision will be made within six weeks as to what reductions will be necessary, O’Brien said.

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