Sales tax revenue down in Texas border town sparking concern

Local News
February 07 2021 06:00 pm

President Donald Trump’s border wall is still in the early planning stages, but just the talk of a potential wall stretching across the nearly 2,000 mile long U.S.-Mexico border has some Texas communities bracing for a financial hit.

Residents in the valley say they have already seen an impact on the local economy.

“Of course it is impacting,” former Mayor of Rio Grande City Ruben Villarreal said. “This whole situation with a border fence is caused a lot of confusion, it has caused some elements of fear in people that don’t understand. They often have talked about this as—people have called it a war zone, it’s a trade zone.”

According to the sales tax numbers collected by the Texas Comptroller’s office, the City of McAllen was down more than 10 percent for the February 2017 report compared to the report in February of last year. 

“The mall was desolated, it was quiet for presidents day,” Villarreal said. “We are seeing the effects of the confusion and the commotion of this border wall talk and order security talk.”

David Contis, President of Simon Malls says so far his Mall is still doing well.

“La Plaza Mall is a thriving retail destination for residents of the U.S. as well as Mexican Nationals, who visit the center frequently.  In fact, the mall generated nearly $450 million in retail sales in 2016 which was down only slightly from 2015. Retailer sales per square foot also remained relatively flat. Demand for space at La Plaza Mall continues to far exceed supply.  In fact, occupancy at La Plaza Mall rose in 2016,” Contis said in a statement. “Given such demand, Simon is currently expanding La Plaza Mall with more than 200,000 square feet of new stores that will contain 4 junior anchors, 6 restaurants and 25 more specialty shops, all opening in the fall of 2017.”

Contis says there may not be as many international shoppers, but Valley residents are shopping more than ever.

“As the largest owner of malls in the United States, we have seen a reduction in retailer sales from our international customers and friends from Mexico. However, this reduction is being felt primarily in malls that are located near the Canadian or Mexican borders or host a large international customer base, be they from South America, Europe, or Asia,” Contis said. “This reduction in retailer sales is due to the strong U.S. dollar and is consistent with the impact experienced by our peers, as well.”

Economist Nathaniel Karp with BBVA says residents in the valley shouldn’t worry about a financial hit just yet.

“I think that we sometimes forget that the economy evolves and this region has been able to reduce the dependency on Mexico to some extent,” Karp said, “and create some sources of domestic growth that are more insulated from that exchange rate depreciation or the impact from that.”

Karp says Trump’s wall will actually strengthen the local economy because it will no longer depend so heavily on Mexico.

“I think what we’ve seen so far is that the region has managed to rely more on these sectors that are not as dependent as we have had before,” Karp said.

*Correction: This story originally stated that La Plaza Mall was the highest grossing mall in the nation and that recently it has seen less shoppers. The story has been corrected to include a statement from the mall.

Copyright 2021 Nexstar Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


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