As communities across the state start the slow process of reopening their economies amid the ongoing COVID-19 pandemic, are beginning to get a glimpse at the economic cost of the health crisis.


The city of Sherman is reporting a 5 percent decrease in sales tax revenues for the month of March as many businesses shutdown temporarily due to the health concerns. Despite the decrease compared to 2019 numbers, city officials said the news was softer blow than initially expected.


“The march numbers give us our first glimpse into how the COVID(-19) response is going to play out on the local level,” Sherman Community and Support Services Manager Nate Strauch said Tuesday. “The projections we had were right in line with where the final numbers ended up. That is certainly helpful for planning purposes moving forward.”


Strauch said the city is requesting more detailed numbers from the state, including a breakdown of how much individual businesses paid in sales taxes.


It was in mid-March when many businesses, including non-essential retail, closed their doors to the public as a part of efforts to prevent the spread of the disease. However, business continued mostly as usual, for the first part of the month.


This trend continued throughout most of April, with the majority of retail reopening with reduced capacity on May 1. For the month of April, city officials expect that the loss could be closer to 15 to 20 percent.


“However, we think the pain is going to get much worse before it gets better,” Strauch said. “We are expecting the April sales tax numbers to be much lower than the March numbers.”


Despite the lower numbers, city officials said March’s losses were on the lower end of the spectrum.


Kent Sharp, president of the Sherman Economic Development Corporation, attributed this slightly to the nature of Sherman’s market.


Despite the closures, many of Sherman’s big-box retailers remained open and continued to do business. Also, Sherman is less reliant on other industries.


“A lot of our box stores stayed open,” Sharp said. “We don’t have as much entertainment as Dallas, for example, does. Those are big sectors and they have taken a hit.”


For March, SEDCO saw about $373,000 in revenue from its portion of the sales tax — a decrease of about 5.35 percent compared to the $394,000 earned in March 2019.


Despite the loss, Sharp said SEDCO has still seen a revenue increase over the previous year, as October through February all increased over 2018-2019’s totals. As of March, sales tax revenues were up about 4.52 percent in spite of March’s poor performance.


“The big question is how long is it going to last,” City Manager Robby Hefton said. “My sense is that this is a steeper decline that happened more quickly, but won’t be as long lasting as our last recession, at least here in Sherman and North Texas.”


Hefton said the city currently does not plan to have any significant cuts in services, outside of those necessitated by social distancing and safety concerns. Instead, the city will likely use its reserve funding to make up the difference.


“We have reserves and we keep reserves for this very reason. We call it our rainy day fund and if this isn’t a rainy day I don’t know what is.”


Currently, the city maintains about 65 to 70 days or reserve. This number represents how many days the city could continue to operate at current levels without additional revenue.


Current guidelines call for the city to maintain between 60 and 90 days of reserve under normal conditions.


“If we are having to spend about $1.2 million of reserves, we are knocking about 10 days off of that reserve level,” Hefton said.


The question remains on when the city may decide to use these funds. In previous conversations, the city of Denison has motioned that it might wait until 2021 before it dips into its reserve funding as city leaders anticipate a longer downturn.


“That is literally the million dollar question — or rather the $2.5 million to $3 million question — for us,” Hefton said. “If for us, sales taxes were down about 15 percent for a full year, that about be about 2.5 million for us. We are not projecting that and we are not expecting that, but we do not have enough data to know if that is going to be the case or not.”


Michael Hutchins is the local government reporter for the Herald Democrat. He can be reached at mhutchins@heralddemocrat.com.