Pandemic helps to plug ‘sales tax leakage’ in rural South Texas county as more folks shop north of border

Coronavirus

RIO GRANDE CITY, Texas (Border Report) — At a time when many Southwest border communities are suffering from a drop in sales tax revenue due to travel restrictions imposed during this COVID-19 pandemic, rural Starr County in deep South Texas is reporting a surprising bump in its sales tax earnings because residents are no longer heading south of the border to shop and are buying locally, the county’s economic leader told Border Report.

Rose Benavidez, president of the Starr County Industrial Foundation, a nonprofit that is the economic engine of the county, said Wednesday that overall Starr County this month has had an increase of 19.78% in sales tax revenue from October 2019. And since the pandemic began in March, sales tax revenue has gone up from 12% to 20% in the incorporated cities and unincorporated areas of the county, she said.

Rose Benavidez, president of the Starr County Industrial Foundation, took part in a roundtable discussion with Starr County leaders in Rio Grande City on Oct. 13, 2020. (Border Report Photo/Sandra Sanchez)

“We’re pretty confident in what those numbers have translated for us is that the sales tax leakage has been reduced significantly, whether it’s because of stay-at-home orders or peoples’ unwillingness to travel and stay close to home,” Benavidez said.

Prior to the pandemic, Starr County was “leaking” $500 million a year in sales taxes, Benavidez said.

The view from Roma, Texas, in Starr County, looking across the Rio Grande to Ciudad Miguel Alemán in Tamaulipas, Mexico, where many South Texans had gone to shop prior to the coronavirus pandemic. (Border Report File Photo/Sandra Sanchez)

Much of that was from residents crossing international borders for bargains in Mexico, or heading to the more-populated bigger cities, like McAllen, about an hour’s drive east, to shop.

The county seat of Rio Grande City has seen a 14% to 18% in sales tax revenues, which Benavidez says is significant for this town of just 15,000 people.

Rio Grande City is the county seat for rural Starr County in South Texas. This border community is used to overhead surveillance, such as the aerostat seen flying near its city hall. (Border Report File Photo/Sandra Sanchez)

Overall, the sales tax increases are startling and bode well for this rural community of just 64,000 residents — especially since many border communities are hurt from a tremendous drop in retail sales and traffic on international bridges due to the border travel restrictions that have been implemented since March 20 to stop the spread of coronavirus.

The McAllen-Hidalgo-Reynosa International Bridge, for instance has had a drop in $2 million from a lack of travelers coming north, McAllen Mayor Jim Darling said.

Benavidez was among several Starr County leaders who on Wednesday took part in a roundtable discussion with U.S. Rep. Henry Cuellar, D-Texas, and officials with U.S. Customs and Border Protection to discuss the health of the county and whether leaders believe it is safe to reopen the land ports.

Cuellar announced that he has met with CBP Commissioner Mark Morgan who has instructed agents to begin discussions with local shareholders and leaders up and down the southern and northern borders to gauge their interests and concerns regarding reopening land ports.

Recently a bipartisan group of lawmakers, including U.S. Sen. John Cornyn, R-Texas, and  Se. Kyrsten Sinema, D-Arizona, and Rep. Cuellar, sent Acting Homeland Security Secretary Chad Wolf a letter requesting the Trump administration supply a plan for reopening the ports.

Mayor Darling has told Border Report that he doesn’t believe it is fair for land ports to be closed to all but “essential” travelers, while anyone can fly into an airport.

Sam Vale, chairman of the Starr County Bridge Association, and president of the Starr-Camargo Bridge Company, which runs the Rio Grande City-Starr Camargo International Bridge, said non-commercial vehicular traffic is down 60% since travel restrictions were implemented. But local shopping explains the anomaly in the local sales tax figures.

“What’s happening is people aren’t traveling down to McAllen and buying down there. That’s why the sales taxes are going up here,” Vale said.

In June, Darling told The Monitor newspaper that sales tax revenues in McAllen had declined by 30% — a drop nearly six times as much as other Rio Grande Valley cities.

Sandra Sanchez can be reached at Ssanchez@borderreport.com.

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