Texas' sales tax haul drops by biggest percentage in a decade, signaling budget crisis

[alp227]

Source: The Dallas Morning News

AUSTIN — The coronavirus outbreak is creating a budget crisis for Texas of historic proportions, as sales tax collections for the lock-down month of April slumped by the biggest percentage – 13.2 – seen in a decade and smaller sources of revenue such as hotel occupancy and booze taxes racked up their steepest declines on record.

On Monday, Comptroller Glenn Hegar released monthly tax-collection data that for the first time captured the fiscal carnage caused by the COVID-19 pandemic. The picture was grim.

As expected, sales tax, the state’s revenue workhorse, got clobbered.

Hegar said the worst loss of sales-tax revenue came in the oil and gas sector, and the separate state taxes on production of oil and natural gas saw revenue declines, respectively, of 75% and 76%.

Read more: https://www.dallasnews.com/news/politics/2020/06/01/texas-sales-tax-haul-drops-by-biggest-percentage-in-a-decade-signaling-budget-crisis/

[oldsoftie]

1. Booze taxes DROPPED? That doesnt make any sense. Alcohol sales are way UP

[LisaM]

3. They've had to cancel lots of events, such as SXSW, sporting events....

Package liquor sales might be up, but bar and restaurant and event sales must all be down.

Some friends and I were supposed to go to Austin this week, which we've postponed till next year. We were just a small group - 10-20 people - but multiply that by everyone else who didn't go for 4-5 days and stay in hotels and eat at restaurants, and it's got to be a lot.

No Astros, no Rangers. No hockey. No basketball. Texas hosts lots of events.

[oldsoftie]

5. Ahh yes. Forgot about the events. I guess because i never buy much at them!

[DENVERPOPS]

2. Poor babies..........

Texas is a tax-friendly state, as it does not have an income tax. As a result, Social Security retirement benefits, pension income, retirement account income and all other forms of retirement income are not taxed at the state level in Texas.

Sales tax is an extremely regressive tax and the politicians in Texas, as well as some other states, love having and increasing sales taxes.....rather than having an income tax.

[LisaM]

4. I'm in Wasington, a blue state, and we have a very regressive tax, too.

It's very dependent on tourism, sales tax, etc. No state income tax, which is insane, given the high salaries in the tech sector. Chickens will be coming home to roost now.

[marlakay]

13. I was living there when we took a vote to tax people making

More than 500K, but the ads scared everyone that it would go down to regular folks so didn’t pass.

[DBoon]

6. not just regressive also volatile

sales tax revenue can change with the economic winds

[NCjack]

7. Just go bankrupt. Incur new debt. Keep repeating cycle until you

have enough money to operate in the black. Right? That solution was good enough for Blue states. You should do it.

[displacedtexan]

16. Mitch knew full well that most dumbass Deplorables don't know there's no such thing

as states declaring bankruptcy.

It’s important to note that, under current law, states cannot declare bankruptcy. So Congress would need to pass a law allowing it.

The primary reason for the lack of state bankruptcy provisions is the U.S. Constitution. "Under the Constitution, states are ‘sovereign’ entities, and the federal government has limited power to act on them directly," said Vincent Buccola, an assistant professor of legal studies and business ethics at the University of Pennsylvania’s Wharton School.

In an analysis, Kenneth Katkin, a law professor by Northern Kentucky University, wrote that "the contracts clause of the Constitution prohibits state governments from ‘impairing the obligation of contracts.’ As originally understood and enforced, this clause prohibited state legislatures from passing any laws to relieve either private debt or the state government's own debt."

While the Supreme Court’s interpretation of bankruptcy law has varied during the 20th century, state bankruptcy was never seen as a permissible option. Even if a law did pass, David Schleicher, a professor at Yale Law School, told us there would be constitutional challenges.

https://www.politifact.com/article/2020/apr/24/can-states-file-bankruptcy-should-they-what-you-ne/

[NCjack]

19. I'm also Texan. When I lived in Texas, the dumasses almost made

me insane. Anyway, the state gov't will find a way to make the poor pay the deficit.

[LanternWaste]

8. Austin legislator dropped hints last week our property taxes will be raised.

In fact, last year a cap increase was approved (not passed) in Austin, but last month new provisions were placed into it allowing for an 8% increase in municipalities declared disaster areas by the gov.

[howardmappel]

9. No bailouts for mismanaged red states

After all, as we have all heard ad nauseum, the rethuglicans won't help any "mismanaged" blue states, so fuck the red states -- let them file bankruptcy. Fuck them all.

[Igel]

14. Some red states and some blue states had rainy day funds.

From the years when the economy was decent. They should draw down their reserves first, and I assume they will.

Some don't have reserves. They should have.


Other states raised taxes a lot and spent a lot of the revenue--rainy-day fund or not--and now that the bottom's dropped out of their income are stuck with a far higher base budget. Others didn't.


One thing that'll prove a problem in Texas was increased education spending, courtesy of its rainy day fund. A few months ago the fund was at $8 or 9 billion. Cali's was around $20 billion. They got there by different routes, but I wouldn't call either one's budget "mismanaged."

A fixed bailout amount for each state will entail greater payments to low-pop states, but just making budgets whole will be biased towards states that opted to spend more instead of being cautious. A third route's needed, but I doubt it's achievable, not that I have a clue what it would be.

[howardmappel]

10. Gravel roads

Also, IIRC, Texas state and local funds were so fucked up that many jurisdictions had stop asphalting local roads and were letting them revert to just gravel or dirt. Gotta love all that Texas winning.

[winstars]

11. Time for a state income tax??? LOL

[marlakay]

12. This is what happens with no income tax

And you depend on shopping and gas tax.

We have a higher income tax her no sales tax and lower gas tax. At least in times like this state will have money but will be less next year when incomes go down.

[TomCADem]

15. Republicans Get Burned By Their Own Talking Points

While blue states like CA and NY are definitely hurt by the economic crisis, Red States like Florida and Texas could be hit real hard because they rely mostly on sales taxes, rather than income taxes. Yet, Republicans had to grand stand against aid to States as being a blue state issue.

[Steelrolled]

17. Texas is not alone.

All states will be hurting.

[TexasBushwhacker]

18. I agree

Something like 40% of low income households have at least one family member that has been laid off. How are people going to pay any kind of income tax if they have no job? Of course that effects sales tax too. In Texas, property values will probably fall overall because there will inevitably be foreclosures.

[RussBLib]

20. legalize weed!!

But the neanderthal GOP controls the state legislature and governorship and so won't hear of it. Weed leads to heroin, don't you know?!

Texas would end up being one of the biggest consumers of weed in the country, injecting BILLIONS into state coffers, but, no, weed just makes people lazy. Haven't you heard?!