Authors:

cfletcher

In the wake of last weekend’s Lakefest (pun intended), I thought it would be a good time to examine the economic impact of tourism on Marble Falls.  While many locals bemoan the hassles and inconveniences caused by the boat races or other tourist activities, I would argue that Marble Falls would be an oppressively expensive place to live without tourism dollars.

We’ve explored consumer spending and economic activity on several occasions, and the number that always amazes me and many others is 7.57%.  This was the percentage of sales tax collected in Marble Falls in 2012 that came from Marble Falls residents.  Here is the formula used to calculate this number:

Marble Falls Spending Calculations – 2012

The table that is referenced is the Department of Labor’s Consumer Unit Expenditures Chart.

Since we last ran the numbers, there have been demographic updates as well as new sales tax figures.  Here is what the formula looks like using the latest numbers we have:

Marble Falls Spending Calculations – 2014

In spite of a marginal gain in the number of households and respectable gains in average household income, total local income, and total local expenditures, the contribution toward taxable sales by Marble Falls residents dropped by an entire percentage point in just over a year!  Sales tax collections—and tourism spending—have been that impressive.

I realize that arguments can be made about the definition of “local”: should Horseshoe Bay, Granite Shoals, Cottonwood Shores, Meadowlakes, and other surrounding communities be considered as part of the “local” population?  With the exception of Meadowlakes, the residents of the other cities listed have options (albeit limited) for shopping, dining, and recreation.  In other words, they could spend their money where they live, but much of their spending occurs in Marble Falls and other places.

This brings me to another interesting point regarding the calculation of these figures.  This formula is based on the completely unrealistic and unfathomable notion that 100% of expenditures by Marble Falls residents occur in Marble Falls.  As wonderful as this would be for Marble Falls’s sales tax collections, the real ratio of local expenditures to total expenditures would be substantially less than even the paltry 6.57%.

IMPACT ON THE TAX RATE

In case you didn’t already know, the local sales tax rate in Marble Falls is 2 cents.  Of this amount, 1 cent goes to the City’s general fund, one-half of a cent goes to the EDC for community development and reinvestment, and the remaining half-cent is used for property tax reduction.  Since 2010, the property tax rate in Marble Falls has been around $0.64 per $100 valuation.  This year, the half-cent sales tax reduced the property tax rate by $0.28 per $100.  If 95% of that reduction was the result of outside spending in Marble Falls, then tourists and visitors “bought down” our tax rate from $0.9131 to $0.6483.  On the average residence in Marble Falls, the savings equate to $459 per year, or about 30% of the resident’s City tax bill.

If we are to keep our property tax rate in check, Marble Falls residents should shop locally as much as possible—but we should support and encourage tourism as well.

For more demographics and statistics, visit our community profile page.