Texas comptroller says sales tax increased for 4th month in a row, although gains still small

Texas sales tax revenue up 2.2 percent

AUSTIN, Texas — State sales tax receipts for July were up for the fourth month in a row, providing another sign of Texas’ slow emergence from a 14-month slump, Comptroller Susan Combs said Wednesday.

Sales tax receipts in July were up 2.2 percent compared to the same time the previous year, Combs said. Revenue increased $1.69 billion from July 2009, when Texas was in the middle of an unprecedented slowdown, she said.

The gains since April have been minimal — ranging from 0.1 in May to 2.2 percent in June and July — and not enough to erase the $1.39 billion year-to-date deficit in sales tax revenue compared to the first 11 months of the previous fiscal year.

“It’s still on top of a very bad summer last year,” said Dale Craymer, president of the Texas Taxpayers and Research Association. “It’s a signal of a continuing, very slow recovery, but … sales taxes are still well behind where it needs to be. Two percent doesn’t change that.”

Combs said earlier this week that she didn’t expect another downturn.

But even with the apparent turnaround, the state has far to go to come up with the $1.2 billion gain in sales tax that had been predicted and was built into the current two-year, $87 billion budget.

Combs said she doesn’t think she will have to revise the state’s revenue estimate, however, thanks to continued growth coupled with better-than-expected performance in the oil and natural gas taxes.

Sales tax receipts, which make up almost two-thirds of the state’s tax revenue, had been making double-digit gains for years. But paralleling the national recession, the gains grew smaller in 2008 and by February of last year, started declining monthly. Fourteen months of declines finally gave way to growth in April, when Combs announced that sales tax returns had jumped from a 7.8 percent decline in March to a 1.4 percent gain.

For the current two-year state budget, Combs projected that the state would have about $76 billion in revenue from taxes and fees. Sales tax receipts make up more than half of that figure — a projected $43.6 billion — making them the largest single revenue stream for the state.