Texas Readies Regular Tran Deal, Almost $1B Less Than Last Year's

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DALLAS - Texas will issue $5.5 billion of tax and revenue anticipation notes on Tuesday to smooth cash flows for the fiscal year beginning next week.

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 comptroller's office will take electronic bids through the Grant Street Group Web site from 9 a.m. to 10 a.m. Central Daylight Time. The notes mature Aug, 31, 2010, and are not subject to redemption before that.

The notes carry top marks from the three rating agencies, which prompted Texas Comptroller Susan Combs to note the state's relative economic health.

"Texas is in an enviable position," Combs said. "Certainly, our economy has slowed, but our housing market and business community are not as hard-hit as other states. And our state government continues its commitment to be fiscally responsible by spending taxpayer dollars wisely."

Texas has been issuing Trans for more than 20 years around the opening of the fiscal year on Sept. 1.

"Our biggest financial obligation is to distribute state funding to public schools early in the school year," Combs said. "Even in these times, Texas school districts can be certain their state funding will arrive on schedule, as usual."

While unemployment in the state rose to a 21-year high of 7.9% last week, that rate was below the national average of 9.4% and well below that of California's 11.9% and Florida's 10.7%, and slightly above New York State's 8.6%.

With 16 states reporting double-digit unemployment last week, California, Nevada, Rhode Island, and Georgia all notched their highest level of joblessness since records began in 1976.

In rating the Texas Trans, Moody's Investors Service wrote that the state's strengths include its "history of successful short-term borrowing, conservative revenue forecasting, strong cash management procedures, and the state comptroller's ability to hold back spending in the event of revenue shortfalls."

While Texas revenues are cushioned by oil and gas royalties, the state is vulnerable to declines in sales taxes and property values. The state has no income taxes, and cities, counties, school districts, and other jurisdictions raise the bulk of their revenues from property taxes.

Sales tax revenue fell 11.6% last month to $1.65 billion, Combs reported. 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 wrote. "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."

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