The cities of Brownwood and Early have received May sales tax allocations, which reflect March sales — and the numbers were not bad, despite the COVID shutdowns of many businesses in the last part of that month.
Both cities have braced themselves for sharp downturns in sales tax revenue.
Brownwood saw a slight downturn from May 2019 that was “within the realm of a normal monthly fluctuation,” Finance Director Walter Middleton said. Early saw a 60 percent increase from May 2019, Early City Administrator Tony Aaron said.
But the full impact of the COVID shutdowns on sales tax revenue won’t be evident until later, Middleton and Aaron said.
The May sales tax allocation “is very surprising,” Middleton said via email. “We had been anticipating the possibility of a sharp decline in May because it represents March retail activity.
“That did not happen.”
The May allocation was down slightly from May 2019 by 3 percent, or $16,310, Middleton said.
Middleton provided analysis of several categories in the sales tax numbers. Current period collections — which Middleton said is a “better barometer of local sales tax activity — was down by 4.3 percent, or $23,565.
“This is within the realm of a normal monthly fluctuation and does not appear to have been impacted very much by the pandemic restrictions,” Middleton said.
There are a couple of possible reasons, Middleton said.
• Social distancing didn’t begin until after the middle of March.
• Most of the shutdowns took place during the last week in March.
“So, the potential impact may have been for only a portion of the month,” Middleton said. “Also, the panic buying began early in March because the news was already out with a lot of speculation about what was coming. This likely caused a spike in sales tax collections for the month.”
That leaves “a great deal of uncertainty,” Middleton said. “If the full impact of pandemic restrictions doesn’t show up until April, then we won’t know what that is until we get our June allocation.”
That would reduce the number of months the city is impacted in the current fiscal year, Middleton said.
“Also, we now know that there has been a partial re-opening of the economy, which may mitigate any impact for May retail activity,” Middleton said.
“We won’t know the impact of that until July.”
The City of Early and the Early Municipal Development District both have a sales tax increase over May 2019 of 60 percent, Aaron said via email.
“We attribute this increase to the growth overall in our economy over the last year, as well as recent agreements reached with Solaris Oilfield Infrastructure to pay their local sales tax in Early as opposed to Houston,” Aaron said.
With those factors, the city does not yet have a clear picture of how the COVID shutdowns will impact sales tax revenue, Aaron said.
The March reporting period is a month ahead of where the city expects to see the real impact, Aaron said.
“By this time next month, we will have the clearest picture,” Aaron said. “ We are very aware of the impact that our local businesses and our citizens have suffered over the last six weeks due to shut downs and the loss of employment.”
City officials are considering those losses when making decisions on spending public funds, Aaron said.
“ Helping our citizens and businesses recover is a priority to the city Council and the Early MDD,” Aaron said.
This is the time to take care of “priorities and not perks,” Aaron said. “We believe that Early and our greater community is positioned to recover much quicker than other areas of our state, and we anticipate that we will see this rapidly within the next few months.”