The House Committee on Appropriations met on March 8, 2010, and heard testimony on Interim Charge No. 1:  Monitor the performance of state agencies and institutions, including operating budgets, plans to carry out legislative initiatives, caseload projections, performance measure attainment, implementation of all rider provisions and any other matter affecting the fiscal condition of the agencies and the state.

The committee also discussed the current revenue outlook, supplemental needs in the current biennium, and certain agencies’ 5% reduction plans.

During the House Committee on Appropriations, John O’Brien Director of the Legislative Budget Board (LBB), spoke on his estimated budget deficit of $11billion for FY 2010-2013. His estimation does not include the following scenarios:

·         $12 billion that was in the stimulus section (some of those items were one time funding);

·         A lower projection on property tax rate growth;

·         Enrollment growth;

·         Criminal Justice prison population “creep up”; and

·         HHSC case load increase (it was predicted the caseloads would grow at 2% but they have grown 8%).

Also, Texas sales tax figures may be showing a small sign of recovery.  The state’s chief revenue estimator John Heleman told the Committee that the sales tax revenue for February was 8.8 percent* down compared to the same period a year ago. Texas has seen a string of double digit declines in sales tax collections since June.

The 13.1 percent decline in sales tax collections this fiscal year is about two or three points higher than the Comptroller’s projections, Heleman said. He told the committee a U-shaped recovery is more likely than a V-shaped recovery – which indicates Texas will have a slower recovery.

The following months, he said, will help define whether the most recent numbers are an anomaly or constitute a trend toward recovery.

In regards to the 5% budget cuts, some agencies have asked for exceptions to their proposed cuts. O’Brien noted during the hearing that the leadership will look at those requests and should have a determination in about six weeks.

O’Brien also noted that for this fiscal year, agencies will largely responsible for implementing their own cuts since lawmakers will not be in session until next year.

 *Sales Tax Collections for February

Texas Comptroller Susan Combs said the state collected $1.60 billion in sales tax revenue in February, down 8.8 percent compared to February 2009.

“After eight straight months of double digit declines, sales tax losses have begun to moderate,” Combs said. “Sales tax revenue continues to be down in major sectors such as retail, oil and gas production and construction. However, there was a slight uptick in the manufacturing sector. We will keep monitoring the revenue, and as we have recently noted we expect further declines in the near term before a return to sales tax revenue growth later this year.”

On Friday, Combs will deliver $404.4 million in March sales tax payments to Texas cities, counties, transit systems and special purpose taxing districts. Local sales tax allocations are down 6.7 percent compared to March 2009. So far this calendar year, local sales tax allocations are down 8.4 percent compared to the first three months of 2009.

State sales tax revenue for February and March payments made to local governments represent sales that occurred in January.

Combs will send March sales tax payments of $271.3 million to Texas cities, down 6.8 perce
nt compared to March 2009. Texas counties will receive sales tax payments of $24.4 million, down 11.2 percent compared to one year ago.

The 166 special purpose taxing districts around the state will get $15.8 million in sales tax revenue, down 8.4 percent compared to last March. Ten local transit systems will receive $92.7 million, down 4.7 percent.

For details of March sales tax payments to individual cities, counties, transit systems and special purpose districts, locate the Monthly Sales and Use Tax Allocation Comparison Summary Reports on the Comptroller’s Web site at http://www.window.state.tx.us/taxinfo/allocsum/compsum.html.