DALLAS — Texas sales tax revenues in fiscal 2010 were $1.5 billion less than expected in the official forecast, putting in doubt the projections for collections of $44.3 billion over the two-year state budget cycle.
Comptroller Susan Combs said Thursday that the state sales tax collections in fiscal 2010 were down almost 7% from January 2009’s estimate of $21.7 billion. The official estimate for fiscal 2011 is for $22.6 billion.
Achieving the full two-year projection would require a 15% increase in revenue in fiscal 2011, but monthly revenues show only a slight improvement from 2009.
Combs said sales tax revenues from July sales, which were collected by the state in August, totaled $1.8 billion, less than 1% higher than the same month in 2009.
“For fiscal 2010, which began Sept. 1, 2009, collections declined through the first seven months of the year, often by double-digit percentages, but the modest increases during the last five months resulted in an overall decline of 6.6% for the fiscal year,” the comptroller said.
Combs said sales tax revenues from manufacturing and energy production and exploration were up, but revenues from construction and retail fell below 2009 levels.
“Overall, state sales tax collections appear to have stabilized, but solid growth has not yet resumed,” she said.
In a recent presentation to rating agencies, Combs said sales tax revenues over the current biennium could be $3.6 billion less than projected when the Legislature approved the budget in 2009.
She said the state could end fiscal 2010 with a shortfall of $1.3 billion in total revenues.
The revenue shortfall for the next biennium is expected to be at least $18 billion when lawmakers return to Austin early next year.
Combs will present the revenue projections for fiscal years 2012 and 2013 in January when the Legislature convenes. Lawmakers meet for 140 days every two years to develop the state’s biennial budget.
The 8% sales tax accounts for 65% of general fund revenue.
Many cities rely on their sales tax collections for a quarter or more of the annual operating budget.
Local governments will receive $439.9 million from the sales tax this month from the July sales.
The latest distribution is 2.7% higher than the same month last year, but total allocations so far in calendar 2010 are down almost 2% from the same period last year.
More than 1,100 Texas cities will receive a total of $298 million of July sales-tax revenue, up from $290.3 million in 2009.
Cities have received $2.89 billion from the sales tax in 2010, down from the $2.93 billion from the same period in 2009.
The cities receiving the most revenue include Houston with $36.2 million, San Antonio with $16.6 million, Dallas with $15.1 million, and Austin with $10.6 million.
The state will also distribute $96.5 million to 10 transit districts, $26.9 million to 123 of the state’s 275 counties, and $18.4 million to 169 special taxing districts.
Texas’s general obligation debt is rated triple-A by Moody’s Investors Service and Fitch Ratings, and AA-plus by Standard & Poor’s.