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March sales tax revenues show pandemic’s economic impact

Local News

MCALLEN, Texas – We’re getting our first look at COVID-19’s impact on the economy. March sales tax revenues were disbursed to cities last week. Larger cities in the region with the exception of Mission saw a decrease. Some smaller cities in the region saw large increases like Laguna Vista, Lyford, Penitas, Combes, and San Juan.

“If you recall people kind of ran to the stores to buy certain items, and a lot of those items are taxable. They were able to go to their neighborhood grocery store or even convenience store and buy those items.” said McAllen City Manager, Roy Rodriguez.

Not all small cities did well. Cities like Mercedes and South Padre Island saw larges losses, because they depend on retail and restaurant sales.

The city of McAllen saw a near 8 percent decrease, while not good, the city says they are not bad. Rodriguez says they saw the writings on the wall early on and made adjustments immediately.

“Estimated about a $20 million revenue loss for all funds. That’s not just sales tax but bridge crossings, hotel occupancy tax. We evaluated every single one of them.” says Rodriguez.

SPI mayor Patrick Mcnulty says they expect April numbers to be near 70 percent down. Rodriguez agrees and says the worst is yet to come.

“We’ve obviously have not seen the impact yet, so the next month’s report is going to be the tell and tell, and it’s going to be drastic.” says Rodriguez.  

Rodriguez says the city is prepared and currently under a hiring freeze. The city has also put all capital projects which had not begun on hold and all capital spending is also on hold.

April sales tax revenues will be disbursed to cities on June 12. If you would like to look at the sales tax allocation reports click here.

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