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December 23rd, 2009
City sees first sales tax drop in 20+ years

STAFF REPORT

San Marcos ended its year of sales tax collections inauspiciously in December, receiving its smallest allocation from the state comptroller’s office in 20 months.

The December check punctuated the city’s first yearly sales tax decline since 1987, after which the city added one-half cent to its sales tax rate (increasing it to 1.5 cents).

The comptroller cut the city a check for $1,221,438.38 in December. The last time the city received that little was April 2008, when the check came to $1,196,369.24. The city’s December check is down 5.18 percent from last December’s haul of $1,288,213.72. The average check to San Marcos during the last three years is about $1.5 million.

The monthly sales tax rebate indicates the level of retail and sales activity in a jurisdiction from two months earlier. Thus, the December allocation reflects activity from October. Holiday shopping activity in December shows up on the next February check, which has been the city’s largest every year except once since 1996 (the exception was 2000).

For the year, San Marcos finished with $17,798,267.42 in sales tax collections, down $584,606.71 (3.18 percent) from $18,382,874.13 in 2008, which was the city’s all-time high.

Cities across Hays County experienced a slight drop of 0.94 percent in sales tax collections for 2009, declining from $25.3 million to $25.1 million. Across Texas, cities experienced a 5.09 percent decline in sales tax from 2008, falling from $4.0 billion to $3.8 billion.

New retail openings in Kyle helped keep Hays County tax collections close to even from a year ago. With the openings of Lowe’s and Kohl’s, among other new retailers in Kyle, the city’s sales tax haul jumped 14.49 percent for a new record in 2009, increasing from $2,295,398.68 to $2,628,087.28. However, even Kyle showed a decline in its December check, which dropped 4.75 percent from $202,719.67 in 2008 to $193,085.63 in 2009.

Buda remains the second highest sales tax collector in Hays County, finishing the year at $3,223,015.32, down 0.84 percent from last year’s $3.250.526.51. Buda was running slightly ahead of its 2008 pace until it received its December check, which is down 16.94 percent from December 2009. The city received $239,883.73 this December, compared with $288,812.22 last December.

Across unincorporated Hays County, the December check this year decreased 6.22 percent, falling to $676,258.71 from $721,162.64. For the year, unincorporated Hays County is down 2.89 percent, from $9,758,657.29 to $9,476,550.80. That number declined in unincorporated Hays County for the first time since at least 1988, which is the earliest year for which records are available.

Throughout Texas, unincorporated areas declined 5.21 percent from a year ago, decreasing from $365.8 million to $347.1 million.

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0 thoughts on “City sees first sales tax drop in 20+ years”

  1. This shouldn’t be much of a surprise. With families cutting back this Christmas on top of the poor economy, San Marcos was lucky to escape down just 3.2% this year.

  2. This a relection of October sales. I am sure that December sales (reported in Feb.) will either be flat or up. This is great compared to other areas of Texas and certainly outside of Texas. It seems that people were waiting later in the year to shop this year.

  3. This Christmas was not even in the numbers so your point is not relevant regarding this article. Just thought I would clarify that.

  5. The Busiest shopping days of the year are the week before Christmas. The busiest shopping month of the year is December. I think people waited later to shop this year. I am sure we will see an increase when the December numbers come out in Feb.

  8. Stocks dropped in the spring of 2009 and have now rebounded significantly Most of the work on the current City budget was done in the summer of 2008. With more retail added locally that year no one should have forcasted an overall decline. Being a Monday morning Quarterback is the easy part. I saw no one posting here an overall sales tax revenue decline back in July of 2008 for the Winter season in 2009. Again, the entire Winter retail sales season will not be reported until Feb. of 2010.

  9. While it may be true that nobody predicted this in July of 2008(I don’t know), many of us have been commenting on the need for a more diverse economy and on the folly of rebating so much of our sales taxes to the likes of Target, for far longer than that. Many of those conversations included comments on the inevitability of a sales tax decline.

    More to the point, many people have been predicting this current decline, along with the increased spending that has gone on during that decline. It would certainly seem irresponsible to ratchet up spending, while income was declining.

    The fact that our current spending was planned before the decline began does not invalidate Dan’s question. When we began to anticipate (and then see) a decline in revenue, did we cut spending, or did we continue to increase spending?

  10. I meant to say that many people have been pointing out the current decline…

    Too many things going on at once.

  11. A diverse economy is important and the San Marcos City Council, SM Chamber and SM Economic Development department have been working hard to that end. They should commended for their great work. How much money has been spent on downtown SM will little to no increase in retail space or revenue?

  12. My stocks dropped like a rock in October 2008. The current city budget (2010) was formulated in 2009 (after months of sales tax declines) and went into effect in October. $3 million annual salary increases for police/fire were approved in December. Declining revenues combined with increasing re-occuring expenditures is troubling. I don’t think any money has been spent downtown in years.

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