Hurricane Rita Damages Local Sales Tax Revenue

AUSTIN, November 14, 2005 - Texas Comptroller Carole Keeton Strayhorn today announced her unprecedented plan to help hard-hit local governments whose sales tax revenue has declined since Hurricane Rita struck Southeast Texas September 24.

“Cities, counties and other local government entities don’t need a sudden drop in sales tax revenue making it harder to recover from Hurricane Rita,” Strayhorn said. “Local governments can, if they wish, receive an additional sales tax allocation in November and December to make up the difference between their November and December 2005 sales tax allocations and the amount they received last November and December.

“As a former mayor, I know first-hand how much local governments rely on a predictable flow of sales tax revenue to pay for routine services like law enforcement, fire protection, healthcare, trash pickup and street maintenance,” Strayhorn said. “I am offering local governments an option to help them with short-term fiscal problems until homeowners and businesses repair, replace and rebuild what they have lost, and economic activity returns to normal.”

Strayhorn said local taxing entities in 22 Texas counties that were declared disaster areas can, upon request, receive additional sales tax money in November and December, if their local sales tax revenue has declined compared to November and December of 2004. Comptroller Strayhorn is offering to make local governments whole by ensuring that they receive the same amount of sales tax revenue in November and December of 2005 as they received last November and December. These additional local allocations will be made from the small retained balance in the Local Sales Tax Trust Fund. Local governments that choose to accept the offer will make repayment during 2006.

Though sales tax revenue is up statewide, November sales tax allocations to 73 Southeast Texas cities, counties, special purpose districts and a transit system impacted by the hurricane are down $2.3 million, or 4 percent, compared to November 2004. For 24 of the affected local entities, sales tax revenue is off by 20 percent to 73 percent. A list of the 73 local governments that qualify for sales tax assistance in November is attached.

The 22 disaster counties where local governments may be eligible for additional sales tax allocations in November and December are Angelina, Brazoria, Chambers, Fort Bend, Galveston, Hardin, Harris, Jasper, Jefferson, Liberty, Montgomery, Nacogdoches, Newton, Orange, Polk, Sabine, San Augustine, San Jacinto, Shelby, Trinity, Tyler and Walker.

“Our Texas economy is strong and our overall sales tax revenue is healthy,” Strayhorn said. “Money is available to assist our Texas communities that took a hit from Hurricane Rita.”

Strayhorn reported that state sales tax collections rose to $1.36 billion in October, up 5.9 percent, compared to October 2004. The Comptroller sent $451.4 million in November sales tax allocations to cities, counties, transit systems and special purpose taxing districts, up 8 percent compared to last November.

Texas cities received $310.9 million in sales tax allocations, up 8.6 percent compared to November 2004. Texas counties received November sales tax allocations of $25.1 million, up 5.6 percent compared to one year ago. Ninety-nine special purpose taxing districts around the state received $12.4 million in sales tax, up 9.4 percent compared to last November. Ten local transit systems received $102.9 million in November sales tax payments, up 6.7 percent compared to a year ago.

October state sales tax collections and November sales tax allocations to local governments represent September sales reported to the Comptroller in October by monthly tax filers and July, August and September sales reported to the Comptroller in October by quarterly tax filers.

For details of November 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 www.window.state.tx.us/taxinfo/allocsum/compsum.html.

The Comptroller’s next local sales tax allocation will be made on Friday, Dec. 9.

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