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September brings sales tax windfall for Rio Grande Valley

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Posted: Thursday, September 13, 2012 12:00 am | Updated: 9:18 pm, Sun Sep 16, 2012.

McALLEN — Cities across the Rio Grande Valley will receive a sales tax windfall Friday, reflecting strong consumer and business spending during July.

The blockbuster payments include a $5 million allocation for McAllen, the region’s retail hub, thanks to strong consumer spending and a construction boomlet, according to data released Wednesday by the Texas Comptroller of Public Accounts. McAllen’s allocation grew nearly 25 percent compared to September 2011.

“Of course, everyone’s wondering about the impact of the hail,” said city Finance Director Jerry Dale, referencing the freak hailstorm that struck McAllen on March 29.

Hail damaged more than 1,100 buildings, according to a city count, and dented countless cars. A flood of insurance payouts for new roofs and auto repairs followed.

Those checks appeared to fuel consumer spending in May and probably will have a residual impact throughout the summer, said Steve Ahlenius, president and CEO of the McAllen Chamber of Commerce.

Another possible explanation is increasing traffic across the Hidalgo-Reynosa and Anzalduas international bridges, which generally correlates with retail spending by Mexican shoppers. Compared to last year, monthly traffic counts at both bridges have increased since February.

“When there’s an increase in traffic, there’s an increase in sales tax,” said Superintendent of Bridges Rigo Villarreal.

The windfall, though, wasn’t confined to McAllen.

Across Texas, the September payment to cities was 13.2 percent higher than last year, according to the Comptroller. The Valley’s largest cities fared better than most:

>> McAllen will receive $5 million on Friday, nearly 25 percent more than September 2011.

The eye-popping increase, though, comes with several caveats. It includes a $278,000 audit payment and more than $227,000 in past- and future-period collections. Even without that income, though, McAllen’s allocation remains impressive.

Dale estimated the city’s normalized payment still represents a 16.5 percent increase over September 2011. A spokesman for the Comptroller’s office said retail sales and construction activity accounted for the increase, but couldn’t immediately provide further details.

“We'll take 16 percent any day, won’t we?” Dale said.

>> Edinburg will receive $1.3 million, nearly 16 percent more than September 2011.

>> Pharr will receive $1.1 million, nearly 18 percent more than September 2011.

>> Mission will receive $1.2 million, about 19 percent more than September 2011.

>> Mercedes, home to Rio Grande Valley Premium Outlets, will receive $624,000, about 21 percent more than September 2011.

>> Harlingen will receive nearly $1.6 million, 16 percent more than September 2011. The new Bass Pro Shops has pushed the city’s sales tax receipts higher this year.

>> Brownsville will receive about $2.9 million, nearly 17 percent more than September 2011.

The September payment reflects taxable sales during July and provides a rough picture of consumer and business spending. Some goods, including most groceries, aren’t taxable. Other factors, including the results of sales tax audits, also impact the monthly payments.

For example, Magic Valley Electric Cooperative charged sales tax to residential customers in McAllen for about four years — despite the fact McAllen didn’t actually tax electric bills.

When Magic Valley realized the mistake, the cooperative refunded sales tax totaling nearly $400,000 to customers. Magic Valley asked the Comptroller to consider refunding the tax revenue paid to McAllen, which would come out of the city’s future sales tax payments, said John Cizler, the cooperative’s service division manager.

While the process hasn’t finished, Cizler said he expects the refund to Magic Valley will come gradually, rather than through a single $400,000 deduction from McAllen’s monthly sales tax allocation.

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Dave Hendricks covers McAllen and general assignments for The Monitor. He can be reached at dhendricks@themonitor.com and (956) 683-4452.

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