MCALLEN, RGV – Cameron and Hidalgo counties are experiencing an increase in sales tax revenues, by at least seven percent.
Matt Ruszczak, executive director of Rio South Texas Economic Council (RSTEC), analyzes the sales tax revenue reports distributed by the Texas Comptroller’s Office. Based on the findings, he says the two largest counties for economic retail activity for the region both went up. Hidalgo County went up 8.7 percent and Cameron County went up 7.96 percent for the month of January.
As mentioned in a previous article by the Rio Grande Guardian, Ruszczak says one of the factors impacting performance of the retail climate is the peso exchange rate. In January 2017, the peso exchange rate fluctuated between 20.5 and 22. The higher the value of the peso, the less spending power visiting Mexican nationals have.
“That was the highest ratio that we saw for the peso to the dollar for a long, long time. For January 2018, that situation improved significantly,” Ruszczak said. “Our exchange rates fluctuated between 18.3 to 19.3 so that strengthened the peso. That had a positive impact on some of our guests who are coming across [the border] and doing their shopping here.”
Another factor affecting the retail climate is the price of oil, Ruszczak explained. The price of oil was much stronger in January 2018 compared to January 2017. In January 2017, the price per barrel for West Texas Intermediate ranged between 50.8 and 54. Those numbers increased for January 2018 with the price per barrel at 60.4 to 66.
Ruszczak says he believes both the peso exchange rate and the price of oil are factors that drive the numbers for sales tax revenues. Some of the sales tax revenue numbers for January 2018 in Hidalgo County include:
Edinburg — up 9.29 percent
McAllen — up 7.88 percent
Mercedes — up 10 percent
Mission — up 10.15 percent
Pharr — up 8.12 percent
Weslaco — up 7.87 percent
City and economic development leaders in Mercedes will be particularly pleased with their sales tax revenue figure, Ruszczak said, because for long periods last year the percentages were down by double digits.
Some of the sales tax revenue numbers for January 2018 in Cameron County include:
Brownsville — up 5.23 percent
Harlingen — up 11.46 percent
Port Isabel — up 2.06 percent
South Padre Island — up 17.28 percent
San Benito — up 10.19 percent
Ruszczak says the January 2018 sales tax results also account for the tail-end of the Christmas shopping season. The Christmas season, ranging from October 2017 through January 2018, resulted in a strong rebound compared to last year’s Christmas season. Cameron County was up 6.42 percent, Hidalgo County was up 3.22 percent and between the two counties the numbers were up by 4.24 percent.
Some of the sales tax revenue numbers for the Christmas season, October 2017 through January 2018, in Hidalgo County include:
Edinburg — up 2.09 percent
McAllen — up 3.9 percent
Mercedes — down 5.8 percent
Mission — down 1.09 percent
Pharr — up 7.49 percent
Weslaco — up 2.31 percent
Some of the sales tax revenue numbers for the Christmas season, October 2017 through January 2018, in Cameron County include:
Brownsville — up 4.61 percent
Harlingen — up 10.04 percent
Port Isabel — up 1.42 percent
South Padre Island — up 4.74 percent
San Benito — up 2.88 percent
Further analysis of sales tax numbers includes the time frame between the end of 2016 and the beginning of 2017. During this period, Ruszczak said numbers across the region dipped due to factors such as the peso exchange rate and uncertainty related to the election. However, there were several communities across the region that maintained its sales tax and in time the peso exchange rate started to get stronger.
“The communities that performed very well during this time frame were communities that primarily depended on local consumers for growth. They performed well despite the challenging times and as the year progressed, towards the earlier part or middle of 2017, we saw everybody pick up as the local market continued strong,” Ruszczak said. “The visiting shoppers, our Mexican national friends, started coming over as the peso grew stronger. This began improving their buying power.
Ruszczak said there were “really positive trends” moving into mid-2017 and late 2017. With the January 2018 numbers being just as strong, this gives the region hope that the positive trend will continue moving forward.
“Obviously we cannot predict the future, but it gives us hope that the positive wave has now been sustained for over half a year. And we’re hoping that this positive trend will continue moving forward,” Ruszczak said.
“There are obviously many factors in the coming months that will impact our economic scenario in our region, on a national scale and on a continental scale, but at this point and time, the foundations look strong.
“The exchange rates are stabilizing between the two currencies (dollar and peso) and the prices of commodities like oil are also looking quite strong. The fundamentals of the economy seem to be in the right place so the outlook into the future right now is positive.”
Editor’s Note: The main image accompanying the above story shows the Rio Grande Valley Premium Outlets in Mercedes, Texas.
