The overview
More than 75% of voters approved the ballot proposition in fall 2022, and McKinney’s first liquor license was issued in January 2023. Before the proposition, stores were only allowed to sell beer and wine for off-site consumption. Since then at least 25 licenses have been issued for package liquor stores, and sales have generated more than $817,000 in sales tax revenue.
Sales tax is collected by the city to fund general operations, including its police department, re department and public works department. Lisa Hermes, president of the McKinney Chamber of Commerce, said the sales tax boost was important to maintain McKinney’s quality of life.
“Anytime we can make our sales tax dollars grow, that only offsets the dependency of tax dollars from property tax,” she said. “For the homeowners, that’s really important.”
McKinney’s first liquor sales permit was issued to McKinney Wine Merchant & Fine Spirits, then known as McKinney Wine Merchant. Owner Andy Doyle said he was always interested in selling liquor but was waiting for the proposition to pass.
“Without liquor, I’d be turning away so much business,” Doyle said, estimating more than half of the store’s sales come from liquor.
Measuring the impact
Despite sales tax revenues not meeting local proponents’ initial expectations for package liquor sales, Hermes said the outcome was still a financial success for McKinney. A 2008 study by Texas economist Ray Perryman estimated a community the size of McKinney could see an increase in local sales tax revenue as much as $1.34 million.
“It’s still money that was saved,” Hermes said. “It’s still money that’s not going somewhere else.”
Nearby communities such as Plano, Allen and Prosper already allowed package liquor stores. The chamber’s board of directors identified it as an opportunity to bring that revenue to McKinney.
“We knew that we were losing that money, and we wanted to keep those dollars working for us here in McKinney,” Hermes said.
The chamber drove the effort to place the proposition on the ballot and campaigned in favor of it, Hermes said.
Hermes said the calculation cited from the 2008 study may have been diluted because other Collin County cities “beat [McKinney] to the punch.” Plano, Allen and Sachse all passed package liquor propositions in the 2010s.
“If you were the first one in Collin County to pass it, then you probably would have a higher sales tax number,” she said.
The city collects a 2% sales tax on goods sold in McKinney, including package liquor. Sales tax revenue funds general operations, the McKinney Community Development Corp. and the McKinney Economic Development Corp. The breakdown includes:
- 1% to the general fund for:
- Public safety
- Infrastructure and maintenance
- Parks and recreation
- 0.5% to the McKinney Community Development Corp. for:
- Local grant programs
- Quality-of-life initiatives
- Infrastructure support
- 0.5% to the McKinney Economic Development Corp. for:
- Innovation fund for startups
- Local development support
- Workforce development support
McKinney Chief Financial Officer Mark Holloway said the city receives a majority of its funding from property taxes and sales taxes. Both revenue sources have increased in the last five years.
“The city had some projections of what these sales taxes would generate over time and had spoken with other cities about their experience after these types of stores were allowed,” he said in an email.
Those expectations were factored in with the city’s overall sales tax projections since the city is “growing rapidly” and new businesses are being added to the tax roll every year, he said. The city has met or exceeded its overall sales tax projections in the past few fiscal years, Holloway said.
“We actually had no idea the election was happening until after it passed,” Behrghundi said in an email. “Once we learned liquor sales would be permitted, we saw a great opportunity to join a thriving and growing market.”
Competition with other liquor stores has been “healthy,” Behrghundi said. It motivates each business to improve and offer better experiences for customers, he said.
Stay tuned
Pelican Liquor owner Monty Patel, who bought land for his store in 2023, selected a spot near Melissa because it’s a dry city.
“What’s helping us is the location and making sure that our price point is affordable,” Patel said.
Jake Duke, state retail operations manager for Spec’s Wines, Spirits & Finer Foods, said company officials had been looking at McKinney prior to the 2022 election. Once the proposition passed, “we were ready to make it happen,” he said in an email.
One Spec’s store has since opened, and a second is on the way to 4121 S. Custer Road. Company officials are aiming for an opening in 2026 depending on permitting and construction, Duke said.
“The competition’s about what we expected for a city this size,” he said. “It’s a healthy market, and we’re glad to be part of a growing, vibrant business community.”
