City’s sales tax revenue grows amid pandemic

Wednesday, February 23, 2022

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Dalondo Moultrie The Seguin Gazette

When news of a deadly pandemic reaching Seguin spread, it was easy for some to fear the worst in terms of economics.

However, at least in the form of recouped sales tax revenue, Seguin fared well and continues to see increasing growth in tax revenue, officials said.

The city has set sales tax revenue records in recent months, city of Seguin Public Information officer Jennifer Sourdellia said.

“For the first time in its history, the city of Seguin received its first $1 million sales tax allocation,” she said. “In September 2021, the city’s sales tax allocation was $1,045,000, an almost 30% increase from the same time in 2020. The city also finished the year at $9.7 million in sales tax, a 13% jump over 2020.”

Some at the city initially worried about what kind of havoc the coronavirus pandemic was going to wreak on Seguin, Finance Director Susan Caddell said.

Apprehension would be easy to understand, what with the early mandated shut-ins, closure of non-essential businesses and the cautiousness of some to venture out and risk exposure to the unknown disease.

But the worries proved unfounded as Seguin showed steady improvement from fiscal year 2019 to 2020 when the pandemic arrived and continuing into 2021.

In 2019, the city realized about $8 million in sales tax revenue, according to information Caddell provided. The following year, tax revenue rose to about $8.6 million and soared in fiscal year 2021 to more than $9.7 million.

“We thought with the pandemic, it’s going to go down,” Caddell said. “But I guess when people were closed in, they got a lot of home projects done. We have been seeing a big boom in home builds, too.”

Growth in the number of homes springing up across the city continues to boost sales tax numbers, City Manager Steve Parker said.

Seguin over the last several years has had more than 1,000 new homes built in the city. Besides the tax on home sales, the city also benefits from the population growth and those people spending more money locally, which of course is taxed, Parker said.

“We’re just in a really great spot,” he said.

A population boost is plugging up a huge leak in revenue city officials learned about in a retail leakage study conducted about 18 months ago, Parker said.

The study showed that about $1.4 billion was leaking out of Seguin annually, he said. Seguin’s population of about 30,000 pales in the almost 120,000 people who shop at the local HEB on a weekly basis.

Most of those people, after they shop at HEB, were visiting other communities and spending money outside of Seguin causing the $1.4 billion leak, Parker said.

Recent moves to bolster retail in the city have helped eliminate some of the outflow, he said, which has been realized in increasing tax dollars.

“These new businesses that have come in the last year and a half are really adding to our tax base,” Parker said. “Then you have more people in our city adding to it as well.”

A change in the way online purchases are taxed is another contributing factor, he said.

Previously, goods ordered online were taxed at the place where the goods were packaged, the city manager said. That has changed to where now the place where the goods are received reap the benefits of tax payments, Parker said.

“If you order something online and have it delivered to your house, Seguin gets that sales tax now,” he said. “I don’t have an exact number but it’s definitely a benefit. I’d think at least 10% of that increase is due to Amazon, if I had to guesstimate.”

Growth and taxation techniques aren’t the only factors for Seguin’s continue tax-revenue growth, Parker said. City leaders have thought outside the box for ways to help economic conditions, he said.

Seguin offered an incentive to Burnt Bean Co. Barbecue, for instance, to open downtown and it has had a trickle effect, Parker said.

Southern Goods opened a location next to the eatery and now while folks wait in line to get inside the restaurant, some members of the party might go and make purchases at the retailer next door, he said.

Also, other shops are opening on Sundays when they hadn’t before. They get some of the traffic attracted to retailers in the city and reap rewards, which also benefit Seguin, Parker said.

The goal is to grow the number of homes, keep property tax rates the same and increase sales tax revenue for the benefit of all of Seguin, Parker said.

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Category: news, City of Seguin

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