The $6.9 million sales tax allocation for Frisco was based generally on purchases in July, the Texas comptroller’s office reported Sept. 10. In September 2019, Frisco receive more than $7.57 million in sales tax revenue.
The latest figure is similar to Frisco’s sales tax allocations for May, June and July, which were down 6%-12% compared to the same months in 2019. Those allocations came after social distancing and business restrictions were put in place in late March due to the ongoing coronavirus pandemic. In August, Frisco saw a nearly 10% rise in sales tax revenue based generally on purchases in June. Frisco restaurants and retailers were able to begin 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 June 26 that forced all Texas bars to close. The order also required restaurants to return to a maximum of 50% capacity.
On Sept. 17, Abbott issued an order allowing restaurants, retailers and certain other businesses to expand capacity to 75% beginning Sept. 21.
Frisco Chief Financial Officer Anita Cothran explained some businesses in the city pay sales taxes only quarterly or annually, or have the option of prepaying months. She said the latter may be the reason for the difference in Frisco’s sales tax allotments in August and September compared to the same months in 2019. One of the city’s major taxpayers prepayed those two months ahead of the August allotment, she said.
However, Cothran explained city staff always uses the previous year’s sales tax allotments to know what to expect in the current year.
“Our best indicators are just following the trends from the prior year,” Cothran said. “I think the [trends for the] rest of the calendar year will probably be no different [than last year]. I think it'll be flat. Hopefully it'll be up a little.”
For the fiscal year 2020-21 budget, Cothran said staff budgeted only a 1% increase in city sales tax as it is “a volatile revenue source.”
The latest monthly total puts the city’s year-to-day collections just above last year’s receipts through this point in the year. Year to date, Frisco has been allocated more than $66.87 million in sales tax revenues, which is 0.13% more than last year.
Sales tax receipts make up nearly 25% of Frisco’s total revenues in its fiscal year 2021 general fund budget. That makes sales taxes the city’s second-largest revenue source behind property taxes.
Frisco’s sales tax allocations year-to-date are the eighth highest in the state. Among the cities that have collected more sales tax than Frisco this year, El Paso was the only one that saw an increase in its September allocation compared to the same month in 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 $765.3 million in local sales tax allocations for September to cities, counties, transit systems and special purpose. That total was a 4.5% decrease compared to September 2019.
