Drop in sales at San Marcos outlets impacts city’s sales tax revenue

San Marcos Outlets see a decrease in sales. (KXAN photo)

SAN MARCOS, Texas (KXAN) – The city of San Marcos claims that a drop in sales at the San Marcos outlets has caused the city’s sales tax revenue to fall flat. The city says sales tax collections from January were down 9.35 percent compared to the same time last year.

The city’s finance director, Heather Hurlbert, says this is the first time in years that sales have dropped. “We continue to believe retail sales are down partially due to reduced foreign travel and purchases by these travelers,” she said. “We are hoping that this was just a temporary thing, but we are trying to put things in place to make sure that we are attracting those visitors and those people to our outlet malls.”

Hurlbert says the outlets bring in 40 percent of the city’s sales tax revenue every year. That sales tax revenue goes straight into the city’s general fund that helps pay for roads, the library, police and neighborhood services. The city says if they continue to see a decrease, it could mean cuts to city programs.

“We could freeze capital purchases, vehicles, some of our large equipment and stuff like that on down to more severe reductions in force. We hope that we never get to that point so we will start taking off things that are not as essential to our day to day operations,” said Hurlbert.

She says they are still far away from having to make any of those decisions, but they are making back-up plans in case sales continue to dip.

“We have increased our hotel room count significantly; we’ve also been able to pull in some wonderful manufacturing and other businesses and so we are trying to make sure that we are not as dependent on sales taxes as we have previously,” said Hurlbert.

Hurlbert said the city wasn’t expecting to see sales drop, in fact just last summer she says the outlets were performing great. “We weren’t seeing this downward trend. But, we did at that time modify the percentage of growth, we always budget very conservatively, even though we may have experienced a six or seven percent growth in 2015 and 2016, when we budgeted for 2017, we dropped that down to a three percent growth,” she said.

In the prior reporting period of sales tax generated in December 2016, retail sales were down 9.9 percent.

KXAN has reached out to both Tanger Outlets and the Premium Outlets for comment, we have yet to hear back.

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