San Benito sales tax growth slows

SAN BENITO — After years of growth in sales tax revenue, the city is beginning to see a slowdown, city officials said.

The city is still growing, it’s just growing at a slower pace, officials said.

“We feel this is just a temporary thing,” City Manager Victor Treviño said. “Considering what we’re seeing out there, we’re confident it will pick up and we’ll resume our strong growth.”

Meanwhile, the city is being cautious in budgeting its money.

One of the reasons for the slowdown is that there haven’t been any new big retail projects opening, said Alma Puente Colleli, executive director of the city’s Economic Development Corporation.

In recent years, the city has benefited from such projects as the 2002 opening of Wal-Mart, which brought in a boost of sales tax revenue. But more recently, the city has only had smaller businesses opening, such as a frame shop and a gift shop, both on North Sam Houston Boulevard.

“It started with the Wal-Mart and then we had Harley-Davidson, Bealls, several restaurants, pretty large businesses coming into town,” Treviño said.

“In this last year or so, we’ve seen it’s been just a couple of small businesses. That is why we’re experiencing the slowdown.”

That’s one reason the city is being cautious.

San Benito has always been “very conservative” in its estimates for growth, which is how most cities operate, Treviño said. For example, San Benito has typically budgeted for 3 percent annual growth in sales tax revenue, he said.

But for years, actual revenues were coming in well above that amount, Treviño said.

Over the last eight to 10 years, the city experienced significant growth, averaging about a 7 percent increase in sales tax receipts, Treviño said. Looking at just the past five years, the average has been 9 percent, city Finance Director Rocio Treviño said.

“One year we had a 12 percent increase,” Victor Treviño boasted in an interview Friday.

For the fiscal year that just ended, that number was down to 2.75 percent, Rocio Treviño said.

When the growth is greater than budgeted, the city is able to put the surplus into reserves and invest in one-time special projects, Victor Treviño said.

For example, the city bought police cars, computers and street construction equipment, he said. The city has also been able to pay for some deferred projects, such as park improvements, he said.

Because the city’s growth has slowed, administrators opted to lower its estimate in sales tax revenue in this year’s budget. Projections were cut in half, from the typical 3 percent estimate to 1.5 percent.“We were seeing a trend and as we generate less revenue, we went with an even more conservative estimate,” Victor Treviño said. “We’re going to continue to experience a growth, but that growth is just less.”

The numbers tell the story.

For example, last fiscal year — which ended Sept. 30 — San Benito expected to see at least $3,104,600 in sales tax receipts, Rocio Treviño, the finance director, said. That would have been a 3 percent increase over the previous year.

However, the city actually collected $3,074,814, which turned out to be only a 2.75 percent increase, Rocio Treviño said.

“That’s why for this fiscal year, we’re projecting only a one-and-a-half percent increase instead of the three percent. We’re going even more conservative because last year we didn’t even get the three percent,” she said.

“Numbers don’t lie.”

This fiscal year — which began Oct. 1 — the budget anticipates $3,142,676 in sales tax revenue. At the time the budget was written — when the final fiscal 2006-07 numbers weren’t known — that amount was calculated as a 1.5 percent increase in actual revenues, she said.

As far as the budget is concerned, the city is doing fine, Victor Treviño told the EDC board Thursday night.

“We’re hoping things will get better,” he said. “If they do, we’ll just end up with a larger surplus.”

City Commissioner Celeste Sanchez, who is also an EDC board member, said the city needs to “get busy” in retail to bring growth to the city as well as more sales tax revenue.

“We want those Fortune 500 companies to come and look at us,” Sanchez said.