Sugar Land, Missouri City businesses strained by coronavirus-caused recession

For fiscal year 2019-20, sales tax revenue is projected to account for 39.5% of the city of Sugar Land’s total revenues. In Missouri City, it is projected to account for 18.5% of the city’s total revenue, according to budget documents.

“Some cities are very dependent upon their sales tax, and some cities aren’t because they don’t get as much sales tax,” Thurmond said.

Business burdens

Despite Missouri City’s sales tax showing growth, restaurants such as Sugar’s Cajun Cuisine & Bar have seen business levels so low they are not sustainable and have used any reserve funding, owner Darryl Austin said.

Austin said Sugar’s, located in Missouri City’s Township Square, is getting by on “a whole lot of prayer.”

“We were shut down for several months, and we’re just getting back going really,” Austin said. “Business is a fraction of what it was previously, and honestly I’m not quite sure we are going to make it, to be honest.”

One explanation for why local businesses are feeling the brunt of the pandemic despite city sales tax figures is big-box stores—not local businesses—produce the most sales tax revenue, according to city officials.

Allena Portis, Missouri City’s director of financial services, said 46% of the city’s sales tax revenue in 2019 was from retail stores with only 11% from restaurants. For Sugar Land, Brown said traditionally the businesses producing the most sales tax revenue for the city are big-box retailers, big-name clothing stores located at or near First Colony Mall, chain electronics sellers and e-commerce companies.

Livia Fallet and her husband, Mark, own Frogs, Snails and Fairy Tales, an indoor play place for young children and toddlers located at the Telfair shopping center in Sugar Land.

Even after the business reopened in late June, Fallet said revenue is down considerably, and it has been difficult to continue operating, especially because the facility previously served as a gathering place for families and children.

To keep the business’s doors open, Fallet said they have begun requiring online reservations to keep capacity at eight children or fewer. Additionally, parents now have the option to rent out the entire play space to keep family and friend groups together.

“We’re giving the opportunity for some families to have something indoors to do without fearing that [it is] going to be too crowded or dirty,” Fallet said. “I think people are ready to get out of the house.”

At Sugar’s, however, the restaurant eliminated its lunch hours due to revenue losses, Austin said. In addition to people being hesitant to eat out amid the pandemic, Austin contributed some of Sugar’s slowdown to coronavirus-related layoffs and closures.

Despite Gov. Greg Abbott allowing restaurants to open at 75% capacity Sept. 21, Austin said Sugar’s is not filling its dining room to that level.

“The people are not here, the customers,” Austin said. “We’re not even getting close to that.”

Economic forecast

The most severe decreases in sales tax revenue may not have happened yet, and local governments need to brace for those, Thurmond said.

The COVID-19 recession, considered to have started both domestically and globally in late February, is unlike any other recent economic downturn, Thurmond said: It could last much longer than a traditional recession.

“We haven’t hit the low point yet,” he said, adding local governments must spend money and create budgets wisely. “I would not be very positive right now. ... I would be cutting back.”

Both Sugar Land and Missouri City budgeted sales tax revenues and city expenses for the upcoming year conservatively.

“As we have seen with this year’s declines, sales tax can be a very elastic revenue stream,” Brown said in an email. “And while we are still dependent on them we need to be conservative in how we implement the budget this year to be sure that we aren’t overcommitting.”

Historically, Sugar Land and Missouri City see increases in their monthly sales tax revenue in December, reflecting a busy holiday shopping season, one which could give businesses a much-needed boost this year.

Serenity Organics owner Melanne Carpenter said she hopes people getting out to shop and increased foot traffic near the Missouri City CBD store helps boost sales this holiday season.

Carpenter opened Serenity Organics in June during the coronavirus pandemic, a feat she said has affected the business's ability to have public-facing events. And while the store is taking a hit financially, Carpenter said she is chalking some of that up to the pandemic and some of it up to being a new business that sells a still largely unfamiliar product.

“I’m cautiously optimistic,” Carpenter said. “What I’m optimistic about is I’m hearing people talking about shopping local and helping the small businesses. ... I think people will want to buy local things for Christmas presents ... so that’s what I’m hoping.”

Jones said Missouri City leaders plan to use the city’s increase in sales tax revenue as a reminder to residents to continue shopping local even after the coronavirus pandemic ends.

“Even after [the pandemic] is done, we should be offering a different sense of place for the city that encourages people to stay home, shop home and be home, so that’s going to be a part of economic development experience,” Jones said.

Colleen Ferguson contributed to this report.