The May release of sales tax revenue for Texas indicates a slowdown in the retail economy. Statewide, sales tax revenues declined 7.1% year over year according to the State Controller. This is the worst decline since 2010.
Consumers in Texas begin to react: The stories are now piling up of oil-bust contagion working its way deeper into the overall economy of oil-producing states, including Texas. Unlike some other oil producing states, Texas has a vast and diversified economy. So from the beginning, it was said that this time, the oil bust won’t hurt like it did last time; the pain would be contained in its isolated corner of the economy. But this theory is now falling apart. It comes on top of the weakness of the overall US economy.
Over the past 12 months, collections have dropped 8 times on a year-over-year basis. Total collections for the 12-month period are down 1.8% as shown in the chart.
As the City of Georgetown begins to craft its budget for 2017, Prudence seems the best course. With a slowing of sales tax revenue indicating a more general slowing of the Texas economy, the city needs to restrict budget growth to no more than inflation plus population growth.
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