Texas revenue rising despite recession talk
By JOHN MORITZ
Star-Telegram staff writer
AUSTIN -- With the national economy slowing to a crawl and more than one-third of the states facing revenue shortfalls this year, Texas is bucking the trend.
According to the state comptroller's office, Texas had significant upticks in tax receipts from nearly all of the sectors that measure economic health in 2007.
Sales tax revenue for the 12 months ending Dec. 31 was up nearly 10 percent from the year before. And revenue from oil production and levies on cocktails mixed at bars and restaurants was consistent with that trend.
"Thankfully for us, relatively few of the negative forces going on in the national economy are showing up in Texas right now," said R.J. DiSilva, spokesman for Comptroller Susan Combs, whose tax-collecting office is the canary in the state's coal mine when it comes to warning lawmakers and the governor of potential fiscal problems.
The newsletter which is funded by the Pew Charitable Trust to follow state government trends, reported last week that 18 state governments are facing shortfalls totaling more than $14 billion this year. The outlook gets even bleaker for 2009 when 18 states are likely to be in the red to the tune of $32 billion, according to the newsletter.
DiSilva said the comptroller's office is watching troublesome trends such as the mortgage-lending crisis and the ever-rising price of energy, but remains relatively optimistic that Texas will weather the coming storms.
One of the revenue streams that showed the biggest increase was the tax collected on tobacco products. The dollar figure nearly tripled, not because Texans are smoking more, but more because lawmakers raised the cigarette levy from 41 cents to $1.41 a pack.
Bernard Weinstein, an economics professor at the University of North Texas in Denton and director of the school's Center for Economic Development and Research, said Texas' budget hawks would be wise to keep a close eye on the bottom line in the months ahead.
The home mortgage woes that are hammering states such as Arizona and California, which rely heavily on real estate taxes, will likely make their effect known in Texas as other segments of the economy weaken, Weinstein said.
"In 2007, Texas had the healthiest economy in the nation," he said. "Job creation was twice the national average and unemployment was down by 1 percent. There is no way that 2008 will be as good a year. It looks like we're headed for a recession nationally. Texas will be insulated, but not immune."
Potential trouble spots for Texas are the weakening job market, rising prices fueled by the cost of gasoline and electricity, and a slowdown in housing demand.
Any hitch in the economy would likely affect state revenue, Weinstein said, but it might take several months before the Texas treasury feels the pinch.
The upside to a downturn is that it could actually buy time for state and local governments to make improvements to public infrastructure because labor becomes cheaper, Weinstein said.
DiSilva said there is nothing in the trends suggesting that the comptroller needs to flag state budget writers to make adjustments to the two-year spending plan enacted by the Legislature last year.
"I think we're in good shape for now," he said.
By the numbers
Revenue source 2006 2007
Sales tax $18.9 billion $20.7 billion
Oil production tax $854 million $932 million
Natural gas production $2.1 billion $2.0 billion
$403 million $442 million
Tobacco tax $509 million $1.5 billion
Source: Texas comptroller's office
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