State sales tax revenues plummet

No surprise here.

Sales tax and natural gas tax collections fell more than $1 billion short of projections in the 2009 fiscal year, according to a state comptroller’s report, fueling questions about the financial heartburn that may be ahead for Texas.

“I think it tells us that the economy was softer than expected (when projections were outlined) in January, and tax revenues were lower than expected … and if it weren’t for the federal stimulus money, we would have been in a lot of trouble,” said Dick Lavine, of the Center for Public Policy Priorities, who analyzed state Comptroller Susan Combs’ projected revenue for the fiscal year that ended Aug. 31 and her recent annual cash report.


Senate Finance Committee Chairman Steve Ogden, R-Bryan, said he was examining the numbers but had yet to draw a conclusion.

“We’ve got some time to look at it” with the hope that the economy will begin to recover, he said. “Secondly, we’ve still got a fairly substantial rainy day fund that I’m glad we saved. The problem’s still manageable.”

That assumes that there will be the political will to spend from the rainy day fund, which you may recall requires a 60% majority in the House. What I recall is that outside of maybe some money for Hurricane Ike recovery, there was almost zero willingness to touch the rainy day fund this year. Then the stimulus package got approved and solved all our problems for this session, but I feel confident that the same reluctance to touch the fund, coupled with the desire of the Dan Patrick wing of the GOP to slash and burn, will make that an awful lot harder than Ogden glibly predicts. (Easy for him to say, too. It won’t be his problem.)

The unmentioned elephant in the room, of course, is the structural deficit we currently have thanks to the ginormous irresponsible property tax cut from the 2006 special session. Even if the Lege agrees to drain the rainy day fund to keep things afloat in 2011, we’ll face the exact same problem in 2013. Maybe it won’t be as severe if the economy has really recovered, but I wouldn’t count on it as tax revenues tend to lag behind. The point is that we don’t have the money to pay for that tax cut. The business margins tax and the increased cigarette tax don’t come close to covering the revenue lost to that property tax cut. We’ve paid for it with general revenues twice. What are we going to do in 2011 and beyond? That’s the question that needs to be asked.

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2 Responses to State sales tax revenues plummet

  1. Robert Kane says:

    I’ve been saying all along the City of Houston is going to be in a BIG mess too… much higher than the 103 million Parker was talking about. They didn’t want to scare the crap out of people at election time, then they might have voted for a Republican, lol.

    But seriously, look at the budget. If this were a real business, there would have been furloughs and layoffs already to help lessen the hurt. Wait until Harris County tells (if they already haven’t) how much less to expect in ad valorem tax revenue this year, plus I’m sure there will be a fair number of people not paying tax as they can’t pay the mortgage.

    Again, we keep being told that Houston is in better shape than the rest of the country, it’s all relative.

    Wait until 2021 when most of the bond money comes due for pension shortfalls that wasn’t spent entirely on pension shortfalls. Houston is not going to be the “affordable” place as it use to be, maybe even before then. Why don’t we learn lessons from recent history in some of the “established” larger cities up north, they didn’t become so expensive just because.

  2. Baby Snooks says:

    Of all the misrepresenations by Annise Parker, bolstered by further misrepresentation by Bill White, this is the worst. The city is in big trouble. What’s Annise Parker planning to do when the bottom falls out? Hope no one remembers that she was the controller for six years?

    No doubt our minds will be diverted to the Hutchison versus Perry comedy of terrors shortly with Hutchison waving her pom-poms and proclaiming that Perry has bankrupted the state.

    Never mind that she bankrupted the country with her insistence that we bail out the crooks on Wall Street while opposing bailing out anyone on Main Street and so far has cost the taxpayers an estimated $23 trillion. Not on the books yet as they say. They say. Annise Parker is of course one of those who puts things on the books. And also keeps them off the books.

    We are going to become Detroit. Not so bad except the Beyonce ain’t Aretha.

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