MCALLEN, Texas – Smaller and more rural cities and counties in the Rio Grande Valley did better economically than their bigger neighbors during the early part of the coronavirus lockdown.
A possible explanation is residents either preferred or had no option but to shop locally.
Matt Ruszczak, executive director of the Rio South Texas Economic Council, analyzed the latest sales tax revenue figures for the Valley. The figures are collated by the Texas Comptroller’s Office. The May 2020 report looks at the figures for March 2020.
“These give us the first glimpse of what the impact of the coronavirus will be,” Ruszczak said, pointing out the changes that COVID-19 caused in March. These included the closing of international bridges to non-essential travel, the closing of shopping malls in Mercedes and McAllen, restrictions on Spring Break activities, and around the 24th of March, shelter-in-place orders.
“It was those last ten days when the restrictions occurred,” Ruszczak said.
A Zoom Conversation with Matt Ruszczak
Sales tax revenues in March dropped 5.07 percent for the State of Texas, as compared to the same month in 2019. In the Valley it was a drop of Valley overall 3.94 percent.
“So, our numbers were still pretty good,” Ruszczak said.
Webb County saw its sales tax revenues drop 7.05 percent in March, as compared to March 2019. Maverick County’s drop was 11.11 percent. Val Verde County’s drop was 10.32 percent. And El Paso County’s drop was 10.24 percent.
“We performed much better than anybody else on the border,” Ruszczak said. “The local consumer seems to be very strong. All things considered, we all did okay.”
Hidalgo County’s drop in sales tax revenues in March was 3.42 percent. Cameron County’s drop was 6.17 percent. But, there was an uptick in Starr and Willacy counties. Starr’s sales tax revenues for March were up 5.77 percent, as compared to the same month in 2019. Willacy County’s sales tax revenues were up 16.68 percent.
Looking at the individual communities in Cameron County, Brownsville’s sales tax revenues were down 8.61 percent in March and Harlingen’s were down 5.41percent. But, there was an increase of 15.59 percent in San Benito, an increase of 4.84 percent in Port Isabel, a whopping 37.17 percent increase in Bayview, an increase of 25.9 percent in Combes, an increase of 35.23 percent in Laguna Vista and an 11.23 percent increase in Los Fresnos.
South Padre Island, which relies almost exclusively on tourism, saw a decline in sales tax revenues in March of 31.33 percent as compared to March, 2019.
Looking at the individual communities in Hidalgo County, McAllen saw a drop in sales tax revenues in March of 7.96 percent. Edinburg saw a drop of 2.69 percent, Pharr a drop of 0.85 percent, and Weslaco a drop of 0.66 percent.
However, things were much rosier in the smaller communities. Alamo’s sales tax revenues increased by 10.25 percent in March. Alton’s increase was 25.6 percent. Donna’s increase was 10.36 percent. And Edcounch’s increase was 15.932 percent.
Rio Grande City saw an increase in sales tax revenues in March of 10.73 percent. And Raymondville saw an increase of 14.82 percent.
The city of Mercedes, which relies heavily on its outlet mall, saw an alarming drop of 29.2 percent in March, as compared to the same month in 2019.
“What appears to be happening is our larger communities that have outside visitors obviously saw a dip because that part of the market fell off and also, potentially, because some of our local folks no longer traveled as much to the magnet communities to go shopping. They shopped locally,” Ruszczak said, analyzing the differences between the bigger and smaller Valley communities.
“With shelter in place and social distancing it makes perfect sense to stay in your smaller store in your town than travel to the larger city and be with a large crowd of people.”
Another thing that could have happened, Ruszczak said, is that residents in the bigger communities may have found their local stores ran out of key items and they had to travel to smaller communities to get supplies. “It is a very interesting dynamic,” he said.
Looking head to the June report from the Comptroller’s Office, which will show sales tax revenues for April, Ruszczak said: “I don’t think we will see positive numbers anywhere. Effectively, the whole month of April, all of us where under shelter in place.”
Using a boxing analogy Ruszczak said the Valley received a bloody nose in March but was not on the ropes. He hopes the better than expected figures will help the region cope with the figures for April. He predicted the Valley would “weather the storm.”
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