Sales tax revenues fall sharply in Texas

AUSTIN, Texas - The state's most recent monthly sales tax revenues dropped 11.2 percent from a year ago, the latest sign that the recession is infecting Texas.

The $1.57 billion collected in June, which reflects sales in May, is off from the $1.77 billion collected in the same month a year ago.

One budget official estimates that sales tax collections are $100 million below projections and could fall $550 million short when the fiscal year ends in two months. Eva DeLuna Castro of the nonpartisan Center for Public Policy Priorities says weak consumer spending is the cause of the shortfall.

Sales tax payments to local cities and counties also declined 8.8 percent for July to $426.7 million. The payments were based on May sales.

These numbers put Texas "firmly on the list with other states that have revenue problems," DeLuna Castro said in Saturday's Austin American-Statesman.

In a statement, Texas Comptroller Susan Combs said the figures also reflected strong tax collections from a year ago, when higher oil and gas prices spurred companies to buy more equipment.

The affluent Dallas-Fort Worth suburb of Southlake was among the hardest hit, seeing a 21.7 percent drop to $919,792. University of North Texas economist Bernard Weinstein said that reflected the trend of high-end retail stores feeling the recession more than other areas.

"Like it or not, we have joined the national recession," Weinstein told the Fort Worth Star-Telegram. "It's not surprising that people are spending less."

Taxes on the sales of cars and trucks, projected to generate $2.6 billion this year, are down more than 22 percent from a year ago. The $4.4 billion in business taxes are off almost 4 percent.

However, Combs spokesman R.J. DeSilva said falling revenue was taken into account last month when the comptroller certified that the state would have enough money to cover the current budget and the next one.

DeSilva said the downturn in sales tax revenue is expected to last the remainder of the calendar year.

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