TAX NEWS - June 2010

Texas Tax: Sales tax receipts for May up, barely

Comptroller Susan Combs thinks an end may be near for Texas' tumbling sales tax receipts. Or even already here. But stress the maybe. A double dip is still a risk, she said today.

The state collected $1.775 billion in sales tax in May, an increase of just a couple of million dollars -- or one-tenth of 1 percent -- over a year earlier. "Almost flat," said a Combs spokesman.

"Total sales tax collections have met or exceeded year ago levels for a second month in a row, following 14 months of decline," Combs said in a statement. "This may indicate that a bottom has been reached."

Bright spots were retail trade, oil and gas, and restaurant activity, where revenues increased over May 2009 levels, Combs said.

"Remittances from other sectors, however, such as construction and manufacturing, fell below last year," she said. "While overall economic conditions and sales tax revenues appear to be stabilizing, there remains a risk of further deterioration, before a sustained recovery is underway."

Through the first nine months of the state's two year budget cycle, the sales tax is running nearly $1.5 billion behind Combs' revenue estimate. It produces about 57 percent of state tax money and about a quarter of overall funds, including federal money. So its every wobble is big news in a state looking forward to a shortfall for next session of as much as $18 billion.