With no state income tax, the state budget is heavily dependent upon sales taxes. This makes a decline in consumer spending (the chief dilemma of the current financial crisis nationwide) particularly noteworthy, and potentially devastating. The downturn can have a cascading effect, as local governments are compelled to rely more on property taxes—potentially squeezing the available revenue for community colleges.
State sales tax revenue figures for February are down 2.6 percent compared to a year ago, totaling $1.74 billion, according to Comptroller of Public Accounts Susan Combs. Ms. Combs said further declines are to be expected as the economy continues to constrict. This may not seem like much of a dip, but keep in mind that the population of Texas is growing dramatically, which, in normal circumstances, would result in more consumer spending and resultant tax revenue.
The comptroller sent $433.4 million in local sales tax allocations to Texas cities, counties, transit systems and special purpose taxing districts (down 0.6 percent from last year) and $291.1 million in city sales tax allocations to Texas cities (down 0.7 percent). Ten local transit systems received $97.4 million, down 4.3 percent from last year. Community colleges do not assess sales taxes directly, of course, but the trend is indicative of the decline in state revenue that could be available for formula appropriations to cover the next biennium.
Here's the link for the comptroller's office press releases.
Comments