DALLAS — Texas notched its third straight monthly gain in sales tax revenue in June, but Comptroller Susan Combs says she is not ready to declare an end to hard times.

“While overall economic activity is no longer contracting, a resumption of solid growth in sales tax collections is not yet in evidence,” she said Thursday.

Combs attributed the 2.2% increase in June sales tax revenue to rising collections in the oil- and gas-processing sectors. Collections from the critical retail sector were down from the same period of 2009.

Texas cities estimate that they collected $297.2 million in June sales tax, up 4.5% from a year ago. City sales tax allocations so far this year are still 2.9% behind the same period year.

Counties anticipate sales tax payments of $27 million in June, up 3.9% from June 2009. So far this year, sales tax allocations are down 6.4%, compared to 2009.

Combs will send $18.3 million to 170 special-purpose taxing districts in June, up 10.6% from June 2009. Ten local transit systems will get $100.1 million in sales tax allocations, up 0.5% from a year ago.

State sales tax revenue in June and local sales tax allocations in July represent sales that occurred in May.

Texas has no state income tax and is heavily dependent on sales and property taxes for state and local operations. Education, which is supported by local property taxes, is the largest state expenditure. Texas apportions the funds generated by property taxes to school districts based on their comparative wealth.

Combs offers revenue figures for lawmakers to use when planning spending. In the 2011 session beginning January, legislators face a revenue shortfall that could reach $18 billion, according to ­estimates.

While the U.S. economy entered a recession in December 2007, the Texas economy continued to grow through most of 2008, with nonfarm payroll employment peaking at 10.6 million in August, according to the U.S. Bureau of Labor Statistics. After adding 47,600 jobs in 2008, when the U.S. was losing 3.6 million, the Texas labor market lost 354,200 jobs in 2009.

“Despite the state’s economy contracting in 2009, Texas’ relative economic advantage should continue as the state and U.S. economies turn around and ­expand again in 2010,” Combs wrote in a report Friday. “Although job growth will continue to lag the renewed expansion of economic production, the comptroller’s office estimates that Texas’ [gross state product] will grow by 2.6% during calendar 2010.”

She estimated the U.S. economy should grow at a slower rate of 2% in 2010.

Texas created 168,000 jobs in the first five months of this year.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.