Texas sales tax rebates drop despite rise in U.S. retail sales

Retail sales rose 2.7 percent nationally in August, which is the good news.

The bad news is that the people of Texas have been playing the role of tightwads -- and that's not good for communities like Waco getting their September sales tax rebates.

Texas Comptroller Susan Combs says she will send Texas cities $290 million in sales tax rebates this month -- 12.2 percent less than from the same month last year.

Cities are getting less in rebates because residents are spending less money.

Waco, for example, will receive a September check for $2.01 million, a drop of 8.53 percent from the $2.19 million it received the same month last year.

Rebates in September reflect sales in July reported to Combs' office in August.

"We are seeing national trends move into Central Texas. People here are watching their pennies, just as we've seen TV reports about others doing around the country," city budget director June Skerik said.

Economists are saying the nation is pulling out of recession. Consumers obviously remain cautious, though the Commerce Department on Tuesday reported a 2.7 increase in retail sales in August over July. The department gave most of the credit to the "cash for clunkers" promotion to sell new automobiles.

But overall, "monthly sales tax collections continue to decline as most major sectors of the (Texas) economy, including oil and gas, construction and retail trade, continue to struggle," Combs said.

Skerik said Waco budgets sales tax rebates conservatively, so it's not hurting enough to alter city services. But the city is not happy that rebates so far this year are down 1.28 percent from last year.

Sales tax rebates historically go up from year to year in Waco.

In all of McLennan County, 13 of 19 cities that receive sales tax rebates saw declines for September. Total rebates dropped 8.89 percent, from $3.05 million last September to $2.78 million this month.

Most of Waco's neighbors saw declines, including Woodway, Robinson, McGregor, Lorena, Bellmead and Hewitt. Lacy-Lakeview proved the exception, showing an 8.34 percent increase.

Skerik said sales tax rebates in October should prove interesting because they could be up or down after August's three-day sales tax holiday weekend.

Shoppers received tax breaks on clothing, as they usually do that weekend but also on school supplies for the first time.

Skerik said the big crowds that hit stores for the tax holiday may have bought additional items. The question will be whether those sales offset the loss of taxes on clothing and school supplies.

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