State Revenue Scenarios for Different Economic Conditions and Taxation Policies
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1975-10-01
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Abstract:Recent changes in basic economic conditions have had a considerable impact on state revenues available to the Texas State Department of Highways and Public Transportation (SDHPT). The historical growth pattern for revenues has been interrupted because of reduced growth in travel and numbers of vehicles. This change in the revenue growth pattern, coupled with large increases in costs, has resulted in a large reduction in the real purchasing power of available revenues. Because of this new revenue and cost situation, it is more difficult to predict future SDHPT revenues for different possible economic conditions and taxation policies. This report presents a method that can be used to project future revenues for different scenarios (forecasts) of economic conditions and different taxation policies. Revenue projections for the different economic conditions considered in this report reveal that there is a wide variation in future revenues, depending upon which scenario is considered. Even in the most optimistic case, however, a considerable increase in taxes would be necessary to prevent real revenues from decreasing substantially, if current trends in highway costs continue in the future.
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