UTSA experts lay out pandemic’s impact on San Antonio economy

APRIL 22, 2020 — In the first of a new series of Community Conversations four UTSA experts convened for The Pandemic’s Economic Impact on San Antonio, a virtual panel discussion, today to describe the broad economic impact of the coronavirus pandemic at the local, state and national levels. The experts emphasized the severity of the public health crisis on San Antonio’s economic health while at the same time providing messages of hope and resilience.

Panelists Thomas Tunstall, senior director of research for the Institute for Economic Development; Richard Sifuentes, director of the IED’s Small Business Development Center; Pamela Smith, professor of accounting and associate dean of administration and faculty; and Mike Villarreal, director of the Urban Education Institute, touched on issues such as unemployment, small business assistance, oil production, a sales tax slump, the digital divide and looming state budget cuts during the hour-long town hall.

Tunstall kicked off the conversation with some startling numbers: 17%, a projected current national unemployment rate that’s still climbing, and minus-$37.60, which was the crude oil price on Monday—the first day in history that the price for a barrel of oil dipped into the negative. “We’re certainly experiencing unprecedented events,” Tunstall said.

As the Texas oil industry braces for the worst, Tunstall predicted that the ramifications will be felt more in a city such as Houston, where “probably almost 50% of their economy is driven by the oil and gas industry,” than in San Antonio, where the industry makes up only a relatively small population of overall employment. “It will have an impact,” Tunstall explained, “but San Antonio’s economy is more diversified than in the past. It should be able to weather this better than otherwise expected.”

“I have a lot of hope for us. I believe that we are going to come out of this stronger.”

It was noted by all four panelists that bars, restaurants, tourism and all other small businesses in San Antonio will experience a big financial hit over the course of the year. Sifuentes discussed how he and his team at the Small Business Development Center are doing all they can to help small business owners weather the pandemic.

The SBDC is providing assistance to businesses applying for the Economic Injury Disaster loan or the Payment Protection Program loan as well as guidance and helpful information to help small businesses weigh their options. “Our call volume right now—the inquiry volume—is about six times what it normally is,” said Sifuentes, adding that deposits are now being made into the bank accounts of small businesses that were assisted by the SBDC.

Smith suggested that individuals could help the Alamo City’s small businesses by doing simple little things like calling in orders and making safe pickup purchases to keep them afloat while the city’s “stay home, work safe” order is in effect. She also gave sound financial advice regarding federal relief incentives and personal tax deductions, and noted that a 401(k) withdrawal may not incur the common 10% penalty for those under the age of 59.5 right now.

“During this particular time period, with special circumstances, that penalty will not be assessed,” Smith explained. “It applies to individuals who have been diagnosed with COVID-19, or are suffering adverse financial consequences, such as a layoff, a closure or reduced work hours.”

Smith went on to discuss how more than 58% of the City of San Antonio’s budget comes from sales tax. Unfortunately, budget cuts appear to be an imminent certainty with sales tax revenue declining across the city and state. This will negatively impact public schools and universities, infrastructure and transportation projects, and other public ventures.

Villareal explained that the Texas legislature could balance the state’s budget when it meets for its 2021 legislative session through one of four means: raising taxes, eliminating previous tax cuts, tapping into the Texas Economic Stabilization Fund or making public spending cuts across the state. He predicts that state budget cuts will be the likely strategy. “We could see budget cuts in public education, K-12, anywhere between 15 and 25%, and in higher education from 10% to 15%. Those are big numbers,” Villareal said, adding that cuts for all education institutions will likely be significantly higher than during the Great Recession, which started in 2008.

Villareal also praised the efforts of local school districts and higher education institutions to close the digital divide as their students transitioned to distance learning. Each panelist spoke about how the pandemic has pushed both San Antonio and UTSA to be more resilient and more innovative.

“I have a lot of hope for us. I believe that we are going to come out of this stronger,” Villareal said, touching on how the pandemic has highlighted weaknesses in the public health system, access to higher education, and the quality of distance learning that are now being addressed. “I believe UTSA will play a very important role in discovering those solutions, and serving our community and our nation.”

— Shea Conner