July is typically a slow month for sales tax revenues in South Texas. Schools are on summer break and families embark on vacation out of town, leaving many city and business leaders in the region prepared for a slow month.
But not this year, where nearly every city in the Rio Grande Valley — from South Padre Island and Brownsville to McAllen and Mission to Roma and Rio Grande City — saw increased sales tax revenues.
“You’ve seen cities and economic development organizations being aggressive and creating opportunities,” said Sergio Contreras, President of the Rio Grande Valley Partnership, a pro-business organization.
McAllen has already surpassed last year’s total for the entire fiscal year, which begins in October and ends in September. McAllen City Manager Roel “Roy” Rodriguez said the city will have set a record for annual sales tax revenues once this fiscal year ends. The previous mark for most sales tax revenues collected in a single year was $62.9 million. No more.
“People have some money in their pocket and there’s an overall sense that the economy is good,” said Steve Ahlenius, President of the McAllen Chamber of Commerce. “Retails sales are very reflective of attitudes. And I think we’ve got a lot of optimism and positive outlook.”
Many cities, such as Edinburg, Pharr, Mission, Weslaco and Harlingen, were all up more than 10% in July 2019 compared to July 2018. Contreras said many municipalities “have created awareness” to help improve spending in their cities.
And while wait times at international bridges in the region continue to be an issue, the traffic is not near where it was in the spring and early summer, when President Trump threatened to close the border, followed by the reassignment of hundreds of U.S. Customs and Border Protection officers from ports of entry.
“There’s U.S. product in retail stores and electronic stores at significantly lower prices,” said Contreras, who is also vice chair of the Border Trade Alliance, an organization that focuses on the facilitation of international trade and commerce in North America.
But the current trade war with China could potentially complicate spending in South Texas, Ahlenius cautioned.
“One of the key warning flags is going to be the tariffs on China,” Ahlenius said. “If that game is continued to play out, that may dampen some of the sales.”
The U.S. on Sept. 1 imposed new tariffs on about $111 billion in products, including consumer goods imported from China, with another round of tariffs set to take effect on Dec. 15. Just this week, though, Trump delayed a new round of tariffs on $250 billion of imports from China.
Where the trade war goes next, however, is unclear. For now, sales tax revenues in the Valley have trended upwards, and Rodriguez, the city manager in McAllen, conservatively predicted more increases over the next year. Ahlenius sees a positive end to the year, too.
“The only thing on the horizon could be the tariffs on China, but I think people in the Valley are happy, our workforce keeps growing and they’re spending money,” Ahlenius said.