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Local economy displays strength during inflation

Both Texarkana cities show year-over-year sales tax revenue gains by James Bright | March 26, 2022 at 10:00 p.m.
Texarkana has seen increased sales tax revenue over the last few months on both sides of the state line.

Editor's note: This is part 3 of a story exploring the impact of inflation on the local economy.

Expanding inflation increased prices in the retail sector over the past few months, and as wholesale costs went up, an unexpected benefactor may have emerged.

The cities of Texarkana, Texas, and Texarkana, Arkansas, saw 5.3% and 7.6% increases, respectively, in year-over-year total sales tax revenue in comparing January 2021 to January 2022. Additionally, Texarkana, Texas, saw a 12.9% increase in sales tax revenue from FY 2020 to 2021, while Texarkana, Arkansas, saw a 13.1% increase.

Texarkana, Texas, City Manager David Orr said these numbers show a local economy that can weather national trends.

"We still continue to see significant growth in our sales tax revenue indicating a strong local economy," he said. "Historically, Texarkana's economy has been stable and steady, both in times of strife and boom nationally. Because Texarkana is stable and steady, we don't always feel the sharp rises and falls that the rest of the country is feeling. We always keep a close eye on what is happening at the national level and budget conservatively to keep Texarkana in a good financial position."

Although the increases in tax revenue have been good for the city, Orr said the overall effect is still unknown.

"The most recent significant rise in inflation is still to be determined as far as impact. Our current sales tax revenue received from the state is a lagging indicator which is typically received two months after the sales tax period. For example, March's sales tax revenue is based on January consumer spending."

Texarkana, Arkansas, City Manager Jay Ellington said he's not sure if inflation is directly responsible for the increased revenue.

"I have not had a chance to review and study where these new revenues are coming from. However, I welcome the increase to assist us in improving our existing services to the citizens," he said.

Businesses like Larry's Southern Garden have had to raise retail prices in order to keep up with wholesale costs. However, these price increases have not affected sales, according to owner Larry Nicholson.

"So every plant has gone up just a little bit, but it's almost like people just expect it, so it doesn't really bother them (his customers)," he said.

The price changes vary from product to product, according to Nicholson. He said a plant that cost $2.99 retail last year may cost $3.10 this year, while a box of sheet moss has increased from $44 retail to $65. Aside from those outliers, Nicholson said his cost increases have generally matched national trends and have not increased his profit margins.

"A $22 plant last year would retail this year at $25, so it's kind of gone up probably about 7%, but I think that's about the inflation rate right now," he said.

Orr said there is help available for struggling companies.

"Not only are our offices of economic development and community planning and development constantly looking for opportunities to provide support to our business community, but we recently partnered with the Northeast Texas Small Business Development Center and opened up a SBDC (small business development center) office here at City Hall," he said.

"We hope business owners, struggling or not, take advantage of the services we're providing for their benefit."

Print Headline: Local economy displays strength during inflation

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