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Sales tax collections keep going down

That sound you hear is the budget writers gnashing their teeth.

In more grim news for Texas’ budget, state Comptroller Susan Combs said Friday that monthly sales tax collections are down again, the eighth straight month of double-digit declines.

Collections for January — the period that reflects December holiday shopping — were down by 14.2 percent compared with a year ago.

[…]

“Eight consecutive months of double-digit declines — there is no parallel for what we’re seeing with the sales tax,” said budget expert Dale Craymer, president of the Texas Taxpayers and Research Association.

You wonder what effect all this will have on the Governor’s race. Is Governor Perry going to keep running ads that proclaim what great fiscal shape Texas is in? How are any attacks he’s going to make on Houston’s fiscal shape going to play when contrasted with this?

Speaking of Houston’s fiscal shape, I forget where I saw this, but Houston’s sales tax collections were equally crappy in January, and we got back a smaller amount from the state than last year. Expect the next communication from Controller Ronald Green to be a glum one.

Combs has predicted the state will collect $21.2 billion in revenue from the sales tax in the fiscal year that began Sept. 1, slightly more than the $21 billion collected in fiscal 2009.

So far, however, collections are about $1.2 billion below the amount that had been collected by this time in the last fiscal year.

For the sales tax to bring in as much this year as originally projected, Craymer said, it “would have to grow by 11 percent for the rest of the fiscal year, and clearly that’s not going to happen.”

Sales tax collections represent more than 56 percent of the state’s tax revenue and more than 24 percent of overall revenue.

Lawmakers already expect to face a funding gap of at least $12 billion to $13 billion when they meet in regular session in 2011 to write the next two-year state budget. That figure does not account for new spending to meet the demands of a growing population.

It’s gonna be ugly. And all this is without taking into account the long-term structural deficit that was created by the irresponsible, unaffordable property tax cut of 2006, for which the business margins tax is a completely inadequate replacement. Somebody needs to be talking about this, because it is not sustainable.

One small glimmer of hope:

Craymer said Texas could be eligible for some additional stimulus money if federal legislation passes.

The irony of that just kills ya, doesn’t it?

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One Comment

  1. Shadowguv says:

    Kuff,

    As I noted in a comment on the Chronicle’s piece, actual sales tax collections (prior to this year) were up 40% since 2005. That’s an additional $10 billion in the two year cycle in just a few short years. Current collections are down, just like new car sales are down. They were both at an unsustainable pace. We will see ‘cuts’ but only on the huge INCREASE in (collections) spending from the last five years.

    FYI: The City of Houston is spending (much of it borrowed) $1.5 BILLION per year more than when Bill White took office (almost $4 B up from $2.5). Cuts my eye.