DONNA, RGV – The City of Donna continues to pull in more sales tax revenues thanks to its international bridge, says consultant Ernesto Silva.

The latest sales tax figures released by the Texas Comptroller’s Office shows Donna posting a 16.40 percent increase year-on-year. The increase is the highest recorded among the large to medium size cites in the Rio Grande Valley.

Ernesto Silva

The figures contrast the November 30, 2014, to October 31, 2015, period with November 30, 2015, to October 31, 2016 period.

“We are extremely happy our community continue to leads the Rio Grande Valley in the percentage  growth of sales tax over the last two years. This year’s report of a 14 percent-plus increase over last year is a clear indication our community continues on its path to economic recovery,” Silva said.

“For many years, the City of Donna was viewed as bedroom community with not much growth, but since 2010 after the opening of the Donna-Rio Bravo International Bridge, the City has exploded with new business and Mexican tourists coming to shop.”

In an exclusive interview with the Rio Grande Guardian, Silva said it was important to pay tribute to Mexican visitors. He also alluded to more economic development activity in the months ahead.

“We are extremely grateful to our Mexican friends who visit our community. We encourage them to visit our local shops and restaurants and look forward to the opening of new retailers and restaurants in the near future for them to shop. We have initiated construction on the utilities and look forward to announcing the retailers and shops after the new year.”

There is another spinoff from having more visitors from Mexico, Silva said, besides increased sales tax revenues.

“For our community, the international bridge has not only helped our community by increasing sales tax, but it has also allowed us to reduce our property taxes from $1.25 (the highest in the State of Texas at that time) to 0.88. We are working to reduce it even further this next fiscal year to 80 cents or less, along with reducing water and sewer rates after the new year. Not to mention investing in the City’s infrastructure such as; park improvements, replacing all water meters, street paving, drainage, water/sewer line upgrades, a new 1 million-gallon elevated storage tank and upgrading our water and sewer treatment plants.”

Latest sales tax figures

Year on year, the latest sales tax revenues in Cameron County show:

Brownsville UP 1.58 percent; Harlingen UP 2.23 percent; Los Fresnos UP 24.22 percent; Port Isabel UP 1.35 percent; San Benito UP 1.95 percent; South Padre Island DOWN 1.69 percent;

Year on year, the latest sales tax revenues in Hidalgo County show:

Alamo UP 0.61 percent; Alton UP 8.28 percent; Donna UP 16.40 percent; Edinburg UP 4.57 percent; McAllen DOWN 3.95 percent; Mercedes DOWN 3.61 percent; Mission UP 0.03 percent; Palmview UP 14.30 percent; Pharr UP 3.00 percent; San Juan UP 0.02 percent; Weslaco DOWN 0.18 percent.

McAllen viewpoint

McAllen Mayor Jim Darling said he believes the devaluation of the Peso has impacted sales tax revenues for the cities of McAllen and Mercedes. “The value of the Peso is much, much, bigger to us than any political rhetoric by a governor in Mexico,” Darling said, referencing comments from Nuevo Leon Governor Jaime Rodriguez. Rodriguez urged his constituents not to shop in McAllen because President-elect Trump helped persuade a U.S. manufacturing firm not to take some of its production to Monterrey.

“I kind of did some research on this. The Peso is relatively strong and so it is used by hedge fund people who hedge currency exchange using the Peso because it is cheaper than the dollar. So, Mexico is little bit a victim of its own success. The Peso is susceptible not necessarily to what is happening in Mexico but what is happening around the world,” Darling said.

Jim Darling

“Part of the reason sales tax revenues are down in McAllen is that there are great things happening in our neighboring cities around us. But when you take a look at the figures for Mercedes and McAllen, those are the cities that are probably most impacted by the Peso. I would say a great majority of our reduction (in sales tax revenues) is due to the Peso. Our bridge numbers have not been affected too much. People are still coming here (from Mexico) but they are spending less because of the Peso.”

Rio Grande Valley viewpoint

Analyzing the Valley as whole, the latest sales tax figures showed be viewed as encouraging, said Matt Ruszczak, executive director of Rio South Texas Economic Council.

“Overall, our region looks quite good, particularly compared to the statewide average. The state was up by 1.03 percent, year-on-year. Our neighbors to the north, Nueces County recorded a negative 7.35 percent. Webb County, which is Laredo, showed a 4.58 percent decrease in sales tax revenues,” Ruszczak said.

Matt Ruszczak

Looking specifically at the Valley, Ruszczak said Cameron County is doing best.

“In Cameron County, the increase in sales taxes was 2.41 percent, year-on-year. That is stronger than the state average,” Ruszczak said. “In Hidalgo County, it was 0.32 percent down. But, overall it has been a good 12 months for the region.”

Asked to elaborate, Ruszczak said: “All things considered, with the changes in the Peso, the fluctuations in the oil price, we have fared pretty well. It speaks well about the local economy and its diversity, where we are not dependent on one single economic factor. We are able to balance various economic factors into a positive.”

Asked to comment on the decrease in sales tax revenues for McAllen and Mercedes, two cities that rely more than most on Mexican shoppers, Ruszczak said: “McAllen and Mercedes are slightly down for the year but much less than you see in Laredo. That shows we are not necessarily dependent on the Mexican shopper.”

Ruszczak said a weakened Peso has had an impact but the local economy has been able to carry the retail industry quite well.

“When you look at the Peso in that time frame it has gone from the 16 to the 20s. It is a really significant decrease in value. It shows you the local economy is quite strong and that we get a boost from the Mexican shopper when they are very active,” Ruszczak said.

“We did substantially better than our neighbors and when you combine our two counties, we hovered around the state average. January’s sales tax figures from the Comptroller’s Office will give us a much clearer picture because they will include November and the impact the presidential election and Black Friday had. In September, the Peso kissed 20 and it really did not impact our sales that much.”