Page 13 - Approved Annual Budget FY 2019-2020_Flat

As an indication of economic activity, sales tax increased this past fiscal year after a steady increase in the
previous year. The most significant issue of the Fiscal Year just ended was the substantial increase in
Sales Tax revenues. Overall revenues to the City increased – and greatly surpassed - their previous peak
which occurred in 2014-15.

Total Sales Tax - McAllen

Comparison to '14-'15 (peak year)

$80,000,000

$70,000,000
$60,000,000

$50,000,000
$40,000,000

2014-15 BASELINE 2015-16 2016-17 2017-18 2018-19

At the MSA level, according to the Texas Workforce Commission, over the last 10 years the McAllen-
Edinburg-Mission MSA employment has grown from 283,272 in 2008 to 341,014 in 2018—a 20% increase.
At this level, the unemployment rate is 5.9%. Some of the more significant employment numbers by
industry include government, trade, transportation and utilities, education and health services; professional
and business services; and leisure and hospitality.

The City’s location allows it to take advantage of The Maquiladora “Twin Plant” Program, under which
U.S. firms locate manufacturing facilities in Mexico accompanied by warehousing facilities in McAllen’s
foreign trade zone. From 1988 through 2018 (the latest year available) on a calendar year basis, the
McAllen Economic Development Corporation has been responsible for bringing 327 new companies, that
including expansions has created 24,588 jobs in McAllen. This effort has also resulted in 369 new
companies, that including expansions, has created 92,112 new jobs in Reynosa. Overall, 215,863 jobs have
been created.

Trade with Mexico, including the impact of the Renegotiated North American Free Trade Agreement
(NAFTA) now known as the new United States-Mexico-Canada Agreement (USMCA), as it continues to
develop, has also played a major role in increasing economic activity, including employment for the City
as well as the State of Texas. During 2017, Texas exported $97.7B to Mexico, which represented over
36.9% of Texas’ total exports--making Mexico its Number One Trading Partner. This level of trade
represents a 2.4% decrease from 2014. As USMCA continues to mature, the City of McAllen’s
international toll bridges connecting Hidalgo, Texas with Reynosa, Tamaulipas as well as Anzalduas
connecting Mission, Texas to Reynosa, Tamaulipas will continue to facilitate trade between Mexico and
the United States.

The City’s unemployment rate has steadily declined since 2011, decreasing gradually to 5.10% in 2015.
The following year the rate went up prior to going back down in 2017 to 4.7%. This past year, the City’s
rate has decreased to 4%.

2019-2020 Budget Message ii