Sales tax revenue sees year-over-year decline in McKinney

As expected, McKinney did see a decrease in year-over-year sales tax revenue, though it fared better than other cities. (Courtesy Fotolia)
As expected, McKinney did see a decrease in year-over-year sales tax revenue, though it fared better than other cities. (Courtesy Fotolia)

As expected, McKinney did see a decrease in year-over-year sales tax revenue, though it fared better than other cities. (Courtesy Fotolia)

McKinney is among hundreds of Texas cities that experienced a year-over-year monthly decline in sales tax payments during the early part of the coronavirus pandemic, according to state data.

The city of McKinney sales tax payments for May, which reflects sales from March, was $5.09 million, down about 1.1% from what the city collected in May 2019, according to data from the state.

Mark Holloway, the chief financial officer for the city, and his department took action almost immediately in expectation that the city’s revenues were going to be “horribly affected’ by the pandemic, he said.

In March the city implemented a hiring freeze and part-time furloughs and has suspended traveling and training that requires travel, among other actions to mitigate the loss of revenue, Holloway said.

“A 1.1% [decrease] with actually pretty good news for us,” he said. “You're never happy with a decrease, but 1.1% for the first month of this wasn't bad.”


Since sales tax revenue is volatile, one of the projection models used had it remaining flat with 2019 collections. The slight dip, while not welcomed, is not far off from what the city was projecting with this, Holloway said.

“We had seen almost a 16% increase in the cumulative total from fiscal year ‘19 to the same time in fiscal year ‘20. So we had seen some historic growth here with our sales tax, up to the point of the virus hitting,” Holloway said. “So we were in a condition that was as good as it could be to absorb some of these losses.”

Holloway said he expects the city will see a $3.8 million shortfall in general fund sales tax from what was budgeted. However, that amount could change based on new numbers the city receives.

“We're still working on how the 1.1% decrease affects our model,” Holloway said. “We think that will make that shortfall a little bit smaller, but we're not going to make any major changes until we see our April sales tax data, which we'll collect in June.”

While Holloway’s department works to counteract revenue shortfalls, it also has the task of setting up the budget for fiscal year 2021.

As part of the city’s process in preparing the budget for the upcoming fiscal year, McKinney residents and stakeholders are invited to provide feedback in a virtual town hall. The city announced the launch of the time span to provide feedback to the city started May 19.

The opportunity allows residents to rank the city’s budget priorities, which will be considered as the city begins budget discussions, according to the city announcement. Residents will also be able to offer input during two public hearings on the budget in September. The budget is scheduled for adoption Tuesday, Sept. 15.

Residents can participate in the virtual town hall by visiting http://www.mckinneytexas.org/survey now through Friday, July 10.
By Miranda Jaimes

Editor, Frisco & McKinney

Miranda joined Community Impact Newspaper as an editor in August 2017 with the Grapevine/Colleyville/Southlake edition. In 2019 she transitioned to editor for the McKinney edition. She began covering Frisco as well in 2020. Miranda covers local government, transportation, business and nonprofits in these communities. Prior to CI, Miranda served as managing editor for The Prosper Press, The Anna-Melissa Tribune and The Van Alstyne Leader, and before that reported and did design for The Herald Democrat, a daily newspaper in Grayson County. She graduated with a degree in journalism from Oklahoma Christian University in 2014.