Tom Whitehurst

City's sales nearly as big as they seem

   At first glance, the latest sales tax numbers from the State Comptroller's Office show impressive retail sales gains in Corpus Christi - up 14.5 percent for the year and 31 percent in August alone.
   At second glance, let's remember that our tax rate went up a quarter-cent in April to pay for a new arena and repairs to the seawall. The effects of the higher rate started showing up in the June tax rebates from the comptroller. So, from then on, we ought to spot the previous year's figures by 25 percent, which means that we'd need to slim down those fat numbers.
   But by how much? And since the sales tax figures aren't apples to apples, how are our retailers doing, really - especially considering that car sales and summer visitor numbers are down?
   Doing better
   It turns out that the city's Finance Department has been on top of this, and has discovered that the city's retailers are, indeed, doing better than last year.
   Discounting the sales tax hike, the city showed a 7.56 percent increase in June, a 13.10 percent increase in July and a 4.85 percent increase in August, said Jorge Cruz-Aedo, the city's finance director.
   Again, those are the three months that the effects of the sales tax hike started showing up. The gains in June and July, if you don't handicap for the tax increase, were 34 percent and 41 percent. The math work for arriving at the adjusted figures quoted by Cruz-Aedo aren't as simple as subtracting 25 from each month's total. Since that would have fattened up the numbers and would have made the city look even better, which a city Finance Department would be inclined to want to do, I'd accept the bean counters' voodoo as valid.
   For the year, the city is still a shade below the state average, about 5 percent compared with 5.6 percent statewide, if we discount the sales tax hike. But among the state's top 20 cities, only six are doing better than that. And if we don't bother to handicap, which the state doesn't bother to do, we're third among the Top 20, behind Round Rock and San Antonio. And San Antonio's 15.6 percent gain includes an eighth-cent tax hike that went into effect in October 2000, which means that San Antonio ought to lop off 12.5 percent to get a fair picture.
   Handicapping or not, we're way ahead of Houston (3.6 percent), Austin (2.2 percent) and Dallas (negative 1 percent).
   That's a turnaround. The past few years, when the state's major metros were experiencing phenomenal growth, we were experiencing slow to no growth. But let's not be smug about our OK growth versus their slow to no growth. They have to compare their current performance against their phenomenal recent performance, which skews things.
   Permanent residents
   With car sales and tourism down, city officials conclude that permanent residents are driving the upturn, making more and spending more in a generally stronger local economy.
   "With unemployment coming down, which means more people are working, which creates more disposable income, that, I believe, is one of the biggest drivers of the economy," Cruz-Aedo said.
   Interestingly, Texas A&M University-Corpus Christi economist Jim Lee has observed a lack of consumer backlash against the tax hike.
   "Higher tax is always a disincentive for people to spend," Lee said. "It can be that consumers did not act negatively to the tax rate. It could be that a lot of people didn't know. It's very easy not to notice."
   He tested this theory by asking folks, while he was out shopping, if they knew what the tax rate was. He found that they didn't know the rate, or that it had gone up.
   Better shape to buy
   The sales performance is putting the city in better shape to buy the stuff that the tax hike was supposed to buy. The city had projected $900,000 in the first three months from the eighth-cent dedicated to the seawall, the first of the sales tax projects that will go under contract, and instead took in $1 million.
   The sales performance also put extra snap in city officials' tap dance earlier this month when they went to New York to negotiate the city's bond rating, said City Councilman Rex Kinnison, an accountant who pays close attention to the sale tax figures. The bond rating is especially important, with more than $30 million in bond projects plus $78 million in sales tax projects pending from the city's bond election last November. The city is expected to find out its bond rating Wednesday.
  
  

---

---

  © 2000 Corpus Christi Caller Times, a Scripps Howard newspaper. All rights reserved.