DALLAS - Texas Comptroller Susan Combs said that $5.5 billion of tax and revenue anticipation notes drew an interest rate of 0.48%, the lowest rate the state has ever received on short-term notes.
The notes were sold competitively on Tuesday.
"Buyers bid more than $28 billion to obtain a portion of the $5.5 billion in notes Texas offered for sale Tuesday," Combs said in a statement. "That is more than five times the amount available for purchase. The high demand for Texas' high-quality notes drove the interest rate down to its historic low."
Texas has been issuing Trans for more than 20 years around the opening of the fiscal year on Sept. 1. This year's issue is nearly $1 billion less than last year's $6.4 billion, which was the largest in five years.
The state will use the proceeds of the one-year note sale to distribute funding to public schools early in the upcoming fiscal year and manage its cash flow in anticipation of tax revenue later in the year.
The notes received top ratings from the three rating agencies, which concur on the state's general obligation rating after a recent upgrade from Standard & Poor's. The GO rating is AA-plus from Standard & Poor's and Fitch Ratings, and the equivalent Aa1 from Moody's Investors Service.
Combs said the ratings helped in the sale at a time when many states are facing dire financial constraints.
"The sale shows the financial community's utmost confidence that Texas is a great investment, and our state government continues to be fiscally responsible by spending taxpayer dollars wisely," she said. "Certainly, our economy has slowed, but our housing market and business community are not as hard-hit as other states."
Texas has no income taxes, and cities, counties, school districts, and other jurisdictions raise the bulk of their revenue from property taxes.
Sales tax revenue fell 11.6% last month to $1.65 billion compared to July 2008. Combs sent $544 million of August sales tax allocations to local governments, down 6.8% compared to August 2008. So far this calendar year, sales tax allocations to local governments are down 2.2% compared to this time last year.
"Sales tax collections in July were again down significantly as major sectors of the economy declined, such as retail trade," Combs said. "Oil and natural gas and construction remain weak. The sharp drop in revenue is a reflection of the current poor performance of these sectors as well as unusually strong sales tax collections in July 2008."
