Retail poised to boost The Woodlands’ sales tax revenue in early 2021

After a year fraught with stay-at-home orders and limited in-person business, The Woodlands Township’s financial position in early 2021 is better than projected, but challenges remain, especially in restaurant recovery, township officials said.

Monique Sharp, The Woodlands Township’s assistant general manager for finance and administration, said at the Jan. 27 board of directors meeting the township’s sales tax revenue for Fiscal Year 2020 was 7.7% off budget, as opposed to the 11.2% projected.

The 2020 budget anticipated $47.27 million in year-to-date revenue as of November, and the actual revenue was $43.62 million, according to Sharp. Retail and online sales helped prevent steeper losses, she said.

“That’s remarkable considering we were in the pandemic for 10 months out of the year,” Sharp said.

Reduced revenue was addressed through reduced expenses but also through deferring some capital projects, officials said. The township was budgeted for $106.09 million in expenses for 2020 and updated the projection to $99.22 million because of the pandemic, but it actually spent $101.59 million, according to unaudited reports, Sharp said.

Board Chair Gordy Bunch said about $7 million-$8 million in unspecified capital projects was deferred to help realize savings, but they will eventually need to be addressed.

The township has also received $1.03 million in federal Coronavirus Aid, Relief and Economic Security Act funds as of late 2020, a number Bunch said he hopes to see improve.

“We’re still fighting for CARES Act money,” he said.

Although a revenue shortfall remains, township officials said the overall picture was promising.

“We’re in a good financial position because of the way the board managed the revenue and expenditures throughout 2020 and the pandemic, and we didn’t have to dip into our reserves,” Sharp said.

In January, preliminary numbers based on November sales showed the township is up 5.8% from what it had budgeted in sales tax revenue.

Sharp said restaurants are not performing as well as they normally do, so the numbers are below where they were at the same time last year.

“That’s 1.5% less than the previous year, ... [but] retail is holding steady thanks to online retail,” she said.

As of Oct. 1, 2019, businesses whose only activity is remote solicitation of sales are able to collect sales tax with the revenues benefiting local entities, according to a 2019 U.S. Supreme Court decision.

Retail sales tax formed 48.3% of overall revenue in the township in 2020, according to Sharp. The total amount of sales tax revenue for the year as of November was $45.73 million.

State trends

The effects of the pandemic on revenue can be seen across the state. Texas Comptroller Glenn Hegar released the state’s revenue estimate for the 2022-23 biennium Jan. 11, which showed a 0.4% decrease from the 2020-21 biennium. In a news release, he stated the decline was a direct result of the pandemic.

According to the release, the ending 2020-21 balance will be close to negative $1 billion.

Statewide, sales tax revenue in December based on sales made in November was $2.9 billion, down 5% from December 2019.

Hegar also noted in the release retail sales outpaced restaurant receipts and sales related to travel.

“Retail trade was the principal exception, with the strongest gains coming from online,” Hegar said in the release. “Receipts from restaurants ... and tourism-related businesses continued to be depressed.”

Sales tax accounts for 59% of all tax collections in the state, according to the comptroller’s office.
By Vanessa Holt
A resident of the Houston area since 2011, Vanessa began working in community journalism in her home state of New Jersey in 1996. She joined Community Impact Newspaper in 2016 as a reporter for the Spring/Klein edition and became editor of that paper in March 2017 and editor of The Woodlands edition in January 2019.


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