Retail sales in the Greater Houston area have been sluggish for more than a year, but Spring and Klein retailers and local emergency services districts hope the holiday season will give them a reason to celebrate.

“[Recovery] is going to depend on how long it takes for consumers to feel comfortable opening up their pocketbooks again,” said Patrick Jankowski, vice president of research at the Greater Houston Partnership.

The retail sector added jobs in 2016 and sales tax revenue ticked upward in October for the first time in six months, Jankowski said.

However, many small-business owners reported slower sales this year as a regional economic slump spurred by the oil and gas downturn failed to pick up speed. Area ESDs, which receive a portion of their funding from sales tax revenue, could also feel the effects of a long-term economic slowdown.

“I think [retail sales are] going to increase,” said Myeshi Briley, president of the Spring Klein Chamber of Commerce. “It’s been down a little, but I think people are getting in that shopping mood.”

Holiday sales

Small-business owners and chambers of commerce in the area said they expect consumer attention to return to holiday planning now that media attention has shifted away from the buildup to the Nov. 8 election.

“I think things are going to pick up now that the election is over,” said Barbara Thomason, president of the Houston Northwest Chamber of Commerce.

Business owners said they are planning for a brisk shopping season.

“We’re hopeful about 2017 now that the election season is over,” said Christen Cawley, marketing director for Shannon Fine Jewelry, a family-owned business on FM 1960. “It should be a good Christmas turnout.”

The holiday season is the most important time of the year for retailers of all sizes, said Rhonda Blair, vice president of social media and advertising for Spring Preservation League, a nonprofit association of business owners in Old Town Spring.

“With holiday sales, 99 percent of the American population is shopping for the holidays,” Blair said. “What’s most important about our [Old Town Spring] community is that it is all small- business owners.”

In addition to the oil and gas downturn affecting the Greater Houston area, business owners in Spring and Klein faced a unique economic hardship with several periods of heavy rain and flooding this year.

“[Holiday shopping] is vital for us with the flooding that occurred this fall and late summer,” said Kelly Fonteneau, owner of The Cottage in Old Town Spring. “We’re really hoping that people choose to shop small this holiday season and support local businesses within their communities.”

Another area with a high number of small-business owners looking for an increase in shoppers this holiday season is Vintage Park.

Jerilyn Schultz has owned Blu Ivory Home Decor and Gifts in Vintage Park for four years and said she has noticed a slowdown in retail in 2016, particularly in the months leading up to the election. Schultz said her business has enjoyed increased growth each year until this year.

“It’s been slow so far [in 2016]. Last year they were a constant flow,” she said of customer traffic. “It’s hard for small businesses on their own. It’s a dying breed.”

Funding fire protection

Several area ESDs receive 1 percent of sales tax charged within portions of their districts and depend on that money to fund projects, including fire station construction, vehicles, equipment and firefighter training.

“If it wasn’t for our sales tax revenue in this agency, we would not have the full-time firefighters that we have,” said Fred Windisch, chief of Ponderosa Volunteer Fire Department, which is contracted by ESD No. 28.

About 25 percent of ESD 28’s operating budget comes from sales tax revenue, and holiday sales feed the largest quarterly payment the district receives each year, Windisch said. Ponderosa VFD provides service for an area around I-45 and FM 1960.

ESD 28 uses its sales tax revenue to fund infrastructure projects and to pay full-time firefighters, Windisch said.

Holiday sales are seen in the February disbursements from the state comptroller’s office, which is typically the largest monthly sales tax payment of the year—bringing in about 15 percent more than any other month—he said. Poor sales could affect the district’s revenue if a steep decline persists for a long period, Windisch said.

“Without a doubt, it could have a negative effect,” he said.

ESD No. 7 contracts with Spring Fire Department, which has the region’s largest service area, covering 110 square miles. More than half of the department’s revenue comes from sales tax, Deputy Fire Chief Scott Schoonover said last year. Despite the oil and gas downturn, the district’s sales tax revenue this year has been $7.38 million, an increase of 2.5 percent from last year’s $7.2 million in revenue.

In the Klein area, ESD No. 16 Secretary Steve Falkner said his district has collected an average of $325,000 each month since it began receiving sales tax revenue in October 2015 following voter approval. ESD 16 contracts with Klein Volunteer Fire Department, which serves much of Klein ISD.

Sales tax revenue was used as collateral to obtain a $4 million loan to pay for construction of a new 11,000-square-foot Klein VFD fire station in the Gleannloch Farms area scheduled to open in early 2017. Since the district only recently began collecting sales tax, it is not yet concerned about month-to-month fluctuations, Falkner said.

“We are hopeful the monthly average will increase for the next few years as established businesses begin collecting the tax on a more consistent basis and new businesses move into the district, including the Grand Parkway corridor,” Falkner said.

ESD No. 29, which contracts with Champions Volunteer Fire Department, received $1.2 million in sales tax revenue in 2015 and had collected $1.1 million as of mid-November 2016, ESD 29 President Scott Morgan said. The department appears to be on track to meet or surpass its previous year’s total, he said.

The department uses sales tax revenue largely for firefighter education and improving safety through equipment purchases, he said.

“Sales tax revenue certainly helps,” Morgan said. “If it went away it would impact our ability to [fund department projects].”

Revenue trends

Statewide sales tax revenue increased slightly in October from September, according to the office of the Texas Comptroller of Public Accounts.

Sales tax revenue rose 0.2 percent year over year in October, the first month since April in which revenue had risen year over year, according to the comptroller’s office. However, in fiscal year 2016, which ended in August, statewide sales tax revenue fell 2.3 percent from FY 2015.

Jankowski said retail sales dropped 9.8 percent in the fourth quarter of 2015, but the areas in which consumers spent less money were large purchases such as automobiles, electronics and appliances, rather than in smaller retail purchases such as those made during the holiday season. In the first quarter of 2016, retail sales had only dropped 3.2 percent from the previous year, according to GHP statistics.

As of September, new car and truck sales in the Greater Houston area were down by 40 percent from the previous year, according to GHP statistics.

Some of the reduction in sales tax revenue can also be traced to less spending by businesses, which may have scaled back on their spending in the past year, Jankowski said.

“You can have a slowdown in the economy when businesses don’t purchase a lot, but consumers maintain their level of purchasing,” he said.

During the 12-month time period ending in March 2016, the Greater Houston area reported $117.9 billion in retail sales, a drop of 4.5 percent from the previous 12-month period’s retail sales of $123.5 billion.

However, the number of retail jobs has increased in the past year, according to GHP statistics. As of September, 310,000 people—1 in every 10 residents in the Greater Houston area—was employed in retail, up from 300,000 the previous year.

The retail field is one of the few sectors that has added jobs during the downturn in which the oil and gas industry shed jobs, Jankowski said.

“There’s a sense out there that the worst is over,” he said.