El Paso reaps higher sales tax revenue during pandemic, despite border closure
By Dylan McKim/ABC-7
Businesses in all corners of the economy struggled during the pandemic as they struggled to keep their staffs employed and doors open.
“It is definitely a year we would love to forget,” Elodia Perches, owner of Bridal Novias, an El Paso bridal dress store, said.
With wedding halls closed and large gatherings not allowed, many of Perches’ customers decided to postpone their celebration, and with it, their dress.
Bridal Novias lost 90% of its revenue in 2020 – a harsh reality Perches had never encountered in the 39 years that Bridal Novias has been fitting brides for their wedding day.
As vaccinations rolled out and restrictions on gatherings were lifted, Bridal Novias was able to earn some revenue back when customers rescheduled their weddings.
“We are so happy and thankful to the city of El Paso and Las Cruces and all of the surrounding towns because they have actually said, ‘Let’s shop local,’” Perches explained.
But she did say that they could be making more money if some of their most loyal customers were actually allowed to come to her store. Those loyal customers in Mexican cities like Ciudad Juárez and Casas Grandes are unable to cross the border because of restrictions on non-essential travel that have been in place since March of 2020.
This changed the way Perches is fitting her future brides. Instead of her customers coming to her store, Perches is taking her dresses to them in Mexico. American citizens are free to travel across the border.
“I call myself ‘Ella Blue Bird’ now that I actually deliver baskets door-to-door,” Perches said with a smile.
With Mexican shoppers being so important to El Paso’s economy, one would think that sales tax revenue would be suffering if those customers could not shop in the city’s stores. In fact, the opposite has happened.
According to city data, El Paso’s sales tax revenue continued to grow during the pandemic. Sales taxes are the second highest source or revenue for the city, after property taxes, officials said.
The only time the city saw decreases were at the beginning of the pandemic and at the end of 2020. It’s important to note that El Paso saw an outbreak of COVID-19 infections and deaths in the fall and winter of 2020.
In 2021, revenues have skyrocketed. For example, May of 2021 saw a 24.5% increase from May of 2020.
“We really bounced back quite quickly,” Robert Cortinas, chief financial officier for the city of El Paso, explained. “It’s pretty much a surprise to, I think, a lot of people.”
Cortinas said money from federal stimulus checks are a main factor into El Paso’s success. The retail industry saw the largest growth in sales tax revenue during the pandemic. That industry includes things such as clothing, building materials for home improvement and automotive sales.
Cortinas also credits the resilience of El Paso. He says the economy is very strong and has a history of bouncing back in times of struggle, like during the recession in 2008.
“We don’t see the very high fluctuations but we also don’t see very low fluctuations,” Cortinas explained.
Unfortunately, these eye-popping numbers will not continue for long. Cortinas and his team suspect numbers will drop down to a normal level that the city is used to seeing.
Right now, the border restrictions have been extended until at least Aug. 21. This means, once again, another shopping season has been lost for El Paso retailers who rely on cross-border shoppers: the back-to-school rush.
See ABC-7’s video report on El Paso sales taxes
ABC-7 also looked at sales tax revenues on other parts of the Texas-Mexico border.
The latest numbers available from the Texas Comptroller’s office capture data from fiscal years 2019 and 2020.
El Paso, Brownsville, McAllen and Laredo all saw a drop in sales tax revenue. Brownsville saw a 4.9% drop, El Paso was next with 5.5%, but McAllen’s and Laredo’s drop hovered at 9.4 and 11%, respectively.
If the border restrictions were lifted on Aug. 21, though, Cortinas said El Paso could see an even longer term of high growth.
Growth is what Perches is hoping for, but she will settle for a day when she can outfit her future brides with the most important dress they’ll ever wear right in her store.
“I want to remain positive and know that love is not cancelled and we are here to stay for the long run,” Perches said.
Cover photo: Elodia Perches, who’s owned Bridal Novias in East El Paso for 39 years, says she lost 90% of her revenue when the border restrictions went into effect. She is now offering “house calls” and driving bridal dresses to her customers across the border. (ABC-7 photo)