Sugar Land sales tax revenue from April sales down more than 22%; Missouri City sees 1% decline

Jennifer Brown, Sugar Land’s director of finance, said in a phone call with Community Impact Newspaper that the city is attributing the decline in revenue to the coronavirus. While a 22% decline is steep, Brown said the June collection is better than the worst-case scenario the city had prepared for.

She said the city had assumed a worst-case scenario would result in a 75% decline in sales tax revenue from retail, food and entertainment businesses, which makes up 60% of total sales tax revenue. This, combined with an additional reduction from oil- and gas-related businesses, meant the city was planning for a 55% reduction in sales tax revenue year over year for June.

“We were trying to come up with a worst case scenario of what we need to prepare for,” Brown said. “Thank goodness that didn't come to fruition. So, we were actually pleased with the allocation that we did receive. I never thought I'd be happy to see a 22% decline year over year, but much better than a 55% decline.”

For fiscal year 2019-20, which started in October, the city of Sugar Land budgeted for $50.3 million in projected sales tax revenue. From October through June, the city has collected $39.5 million.

Brown said the city is preparing for the coronavirus pandemic to affect sales tax revenue collections for the rest of the year. The city’s worst-case scenario has sales tax revenue for the 2019-20 fiscal year down 14% from what was originally budgeted, Brown said.

For FY 2019-20, which started in October, Missouri City estimated its general fund would receive $9.6 million in sales tax revenue and rebates, according to a copy of the city’s budget available online. From October through June, the comptroller's office has returned approximately $8 million in sales tax revenue back to Missouri City.

In Missouri City, of the remaining 2%, 1% is deposited in the general fund, while 1% goes toward the Metropolitan Transit Authority of Harris County. METRO then rebates 50% of sales tax collections back to Missouri City for street improvements and other mobility projects.

Sugar Land and Missouri City are both in the process of preparing their budgets for next fiscal year.

“We're still trying to figure out what scenarios and what assumptions we want to build our budget around,” Brown said. “But I think we'll stay conservative and not build in any overly optimistic assumptions of returning to normal just yet.”