Increases so far this year reflect ending of recession, near-completion of DFW Connector

Area cities that rely heavily on sales tax for revenue are cautiously predicting strong holiday sales, based on growth so far this year and completion of the DFW Connector.

"I think we're in line to have another great season," said Sharen Jackson, chief financial officer in Southlake. "We're still trending up for the year. I wouldn't anticipate the holiday season being any different, barring any major economic downturn."

A robust shopping finish to the year would be good news for both businesses and residents, particularly in Grapevine where sales tax represents 47 percent of the city's tax revenue. Residents, as a result, have not had a property tax increase since 1971.

"Because Grapevine is a destination city, a larger portion of the general fund comes from the sales tax," said John McGrane, city administrative services director.

The city had conservatively estimated sales tax revenue over the holidays would rise by 3 percent over last year, he said. But consumer uncertainty caused by the federal government shutdown could make a difference.

Sales tax is one of the most volatile economic predictors.

"A lot will depend on what's happening on the national level," McGrane said. People are less likely to spend money if they are worried about keeping a job or continuing to get Social Security checks, he said.

Recession or Connector?

It's hard to say whether DFW Connector construction or the recession had a bigger impact on Grapevine's sales tax revenue over the past few years, McGrane said.

Sales tax figures dipped in 2009 and then started to climb again, showing a slow recovery.

Grapevine collects sales tax from ticket sales at attractions such as Legoland as well as from retail sales.

The city has allocated $300,000 for a major advertising push this season to let consumers know Grapevine is easily accessible again, McGrane said.

Grapevine also gets a seasonal boost from its many "Christmas Capital of Texas" attractions and activities during the holidays, said Jennifer Hibbs, assistant city manager. Main Street lights, the Grapevine Vintage Railroad's North Pole Express and the ICE! Sculpture show at Gaylord Texan Resort and Convention Center all attract visitors from out of town.

"We are already seeing people making purchases without any hesitation," said Debi Meek, owner of Bermuda Gold & Silver in Grapevine.

Colleyville may have actually benefited from the Connector construction, which may have pushed consumers off the beaten path to the smaller city, said Marty Wieder, economic development director.

Waiting for Whole Foods

Colleyville's sales tax revenues have been higher than last year's for eight months in a row, said Mona Gandy, communications and marketing director.

She said 14 percent of the city's general fund budget is from sales tax revenue. General fund sales tax for August 2013 was up 6.44 percent or $13,996 from August of last year, and October's was the highest ever.

Wieder attributed the increase to new business coming to town and property owners redeveloping existing commercial sites. The city's Walmart has been open for a year.

He expects a better year in 2014-15, after Whole Foods Market opens in the redeveloped shopping center on Colleyville Boulevard, renamed Colleyville Downs. The store is expected to open next year.

Wieder said he expects Whole Foods to attract more retail citywide. City leaders are hoping the big, natural-foods grocer will help shape Colleyville as a destination for shopping and dining.

Where the money goes

Southlake already attracts shoppers regionwide to Town Square. Sales tax revenue makes up 27 to 29 percent of its general fund operations budget in the city. Like Grapevine and Colleyville, Southlake collects the maximum local sales tax, 2 percent, with portions going into different funds.

All three cities have Crime Control Prevention Districts that collect 1/2 percent, money used for capital projects. Another 1 percent goes into general funds in all three cities.

In Southlake, another 1/2 percent is collected for the Southlake Parks Development District; in Colleyville, 1/2 percent goes to the Colleyville Economic Development Corp.; in Grapevine, 3/8 percent goes to the city's Economic Development Corp. and 1/8 percent to the T, the Fort Worth Transit Authority, toward TEXrail, the planned commuter train.

Cities don't directly get sales tax revenue—the state comptroller's office collects the money, takes a 6.25 percent for state sales tax and then disburses the rest.

Westlake makes use of use tax

The town of Westlake has few retail businesses per se, but collects sales tax from several other sources, spokeswoman Ginger Awtry said.

Sometimes economic development agreements include a clause directing sales tax money for construction materials for a new development to the town, which can be substantial in cases like Deloitte University.

In other cases, use tax comes into play. For example, when Fidelity Investments buys office equipment for its Westlake campus, the town gets use tax because the equipment was first used in Texas.

The amounts collected year to year can vary widely and don't reflect any economic trend, said Debbie Piper, town finance director.

Correction: The graphics accompanying this story contained errors. Total sales tax revenues for the city were incorrect, and in Grapevine's case the allocations to The T and economic development were wrong. Both the graphics have been corrected to reflect correct figures.