Senator Eliot Shapleigh - El Paso, Texas

AUSTIN – Sales tax and natural gas tax collections fell more than $1 billion short of projections in the 2009 fiscal year, according to a state comptroller's report, fueling questions about the financial heartburn that may be ahead for Texas.

“I think it tells us that the economy was softer than expected (when projections were outlined) in January, and tax revenues were lower than expected ... and if it weren't for the federal stimulus money, we would have been in a lot of trouble,” said Dick Lavine, of the Center for Public Policy Priorities, who analyzed state Comptroller Susan Combs' projected revenue for the fiscal year that ended Aug. 31 and her recent annual cash report.

Texas got $30.9 billion in federal funds in fiscal year 2009, a 17.6 percent increase over the previous year, due in large part to federal stimulus money and funds received as a result of Hurricane Ike, the comptroller's report said. Federal funding was nearly $2.9 billion more than projected, Lavine said.

The comptroller's report does not address the current two-year, $182 billion state government budget, which includes some $12 billion in stimulus funds. Combs spokesman Allen Spelce called the report “a snapshot” and said the agency is working on an economic forecast.

Chris Cutrone, spokesman for Gov. Rick Perry, said by e-mail, “Texas continues to do better than most other states thanks to our low taxes, predictable regulations, fair and balanced budget with a projected $9 billion in our rainy day fund. However, we are not immune from the national economic downturn.”

Senate Finance Committee Chairman Steve Ogden, R-Bryan, said he was examining the numbers but had yet to draw a conclusion.

“We've got some time to look at it” with the hope that the economy will begin to recover, he said. “Secondly, we've still got a fairly substantial rainy day fund that I'm glad we saved. The problem's still manageable.”

Lawmakers have said they expect a challenge in crafting a budget in the 2011 legislative session. That is largely why they didn't touch the rainy day fund, which is fueled by oil and gas tax revenues, so lower natural gas tax collections will affect it.

“My first thought is that we are fortunate to have ended the 2009 session with a rainy day fund, and my second thought is that 2011 is going to be a challenging year,” said Rep. Mike Villarreal, D-San Antonio, House Appropriations Committee member.

“We all anticipated lower sales tax revenue and natural gas tax receipts this year, and while our overall state revenues remain consistent with the comptroller's revenue estimate, this is exactly why I insisted the last four years on saving our rainy day fund so we will have more than $9 billion in 2011 to balance our budget,” Lt. Gov. David Dewhurst said in a statement.

Lavine, whose group advocates for lower-income Texans, said, “What it says to the federal government is there may be a need for a second stimulus package focused on state and local government, because this money has turned out to be so important for us.”

Ogden disagreed. “If the federal government borrows even more money and calls it stimulus, it's more insane than the first one,” he said.

Michael Quinn Sullivan, of Texans for Fiscal Responsibility, which advocates for limited government, said the figures should show agency heads “that they need to right now be looking carefully at how they're spending the already-allocated dollars and make sure that they're finding savings now.”