The $8.83 million sales tax allocation for Frisco was based generally on purchases in June, the Texas comptroller’s office reported Aug. 12. In August 2019, Frisco received more than $8.04 million in sales tax revenue.
The latest figure is a significant improvement over Frisco’s sales tax allocations for May, June and July, which were down 6%-12% compared to the same months in 2019.
Director of Finance Anita Cothran said city staff were pleased the August allocation was an increase over 2019 as many of Frisco’s businesses were still operating at limited capacity and with limited hours in June.
“We are very encouraged we will meet our budgeted projections for [fiscal year] 2020 with three more months of collections, especially if we continue the trend started in August,” Cothran said via email.
Revenues for the previous three months came after social distancing and business restrictions were put in place in late March due to the ongoing coronavirus pandemic. Frisco restaurants and retailers began reopening at 25% capacity May 1, under guidance from the city and state. However, when coronavirus cases surged throughout the state in late June, Gov. Greg Abbott issued an executive order that closed all Texas bars and required restaurants to return to a maximum of 50% capacity.
The August allocation put the city’s year-to-date collections just above last year’s receipts through this point in the year. Year to date, Frisco has received more than $59.97 million in sales tax revenues, which is 1.28% more than last year.
Sales tax receipts make up a little more than 25% of Frisco’s total revenues in its fiscal year 2020 general fund budget. That makes sales taxes the city’s second-largest revenue source behind property taxes.
For the fiscal year 2021 budget, Cothran said staff are only budgeting a 1% increase in city sales tax as it is “a volatile revenue source.”
Frisco’s sales tax allocations year-to-date are the eighth highest in the state. Among the cities that have collected more sales tax this year, Frisco showed more of an increase over last year compared with every city except El Paso, which is up 1.98% compared to 2019.
On the whole last year, Frisco saw 3.12% growth in sales tax revenue compared with 2018, which had one of the city's lowest growth rates of the past decade.
Across the state, Texas Comptroller Glenn Hegar distributed $908.7 million in local sales tax allocations for August to cities, counties, transit systems and special purpose districts. That total was a 3.6% increase compared to August 2019.
Hegar said total state sales tax revenue for the three months ending in July 2020 was down 5.3% compared to the same period a year ago.
“With about 1.3 million Texans with continued claims for insured unemployment and another 184,000 receiving benefits under the Pandemic Unemployment Assistance program in June, it’s likely that consumer spending was significantly supported by enhanced benefits provided by the federal [Coronavirus Aid, Relief, and Economic Security] Act and related legislation enacted in response to the COVID-19 pandemic," he said in a news release. "With the expiration of these benefits at the end of July, consumer spending and sales tax collections may decline in coming months.”
Sales tax is the largest source of state funding for the state budget, accounting for 57% of all tax collections.