San Antonio’s Economy Slows as the City Enters a New Small-Business Policy Era
Economy, Equity & City Hall
Sales-tax allocations are down 5.65% through July 2026. At the same time, San Antonio is operating under a substantially different, race-neutral contracting policy. The immediate question is not whether one caused the other. It is whether City Hall is measuring the consequences of both.
San Antonio is entering an economic slowdown at the same moment City Hall is testing a fundamentally different approach to small-business contracting.
Through July 2026, the city received approximately $274.5 million in sales-tax allocations. That was about $16.4 million less than during the comparable period in 2025, a year-to-date decline of 5.65%.
The decline comes after more than a decade of long-term growth. San Antonio’s annual sales-tax allocations rose from approximately $269.9 million in 2013 to $499.3 million in 2025. But the pace of growth had already slowed before turning negative in 2026.
Two Different Economic Periods
The sales-tax record and the city’s contracting record do not represent one uninterrupted policy environment.
Before 2025, San Antonio’s Small Business Economic Development Advocacy program included race-conscious tools designed to address documented disparities affecting minority- and woman-owned businesses. The legal framework was grounded in the standards established by City of Richmond v. J.A. Croson Co., which requires strong evidence of discrimination and narrowly tailored remedies.
Beginning in 2025, the city shifted into a substantially different policy period. The revised structure is race-neutral in ways that materially change how opportunity, participation and success should be measured.
The results produced under the old policy cannot automatically be credited to—or used to judge—the new policy.
- 2013–2024 Sales-tax allocations rose over the long term while SBEDA operated with race-conscious components.
- 2023 The city’s disparity study documented continuing marketplace barriers and recommended continued remedies, stronger monitoring and clearer performance measures.
- December 2024 City Council approved major SBEDA ordinance amendments.
- January–July 2025 The revised program took effect and moved through implementation.
- 2026 San Antonio recorded a 5.65% year-to-date sales-tax allocation decline through July.
The African American Business Question
The city’s historical reports show that total minority- and woman-owned business participation often reached or exceeded broad program benchmarks. But aggregate success can obscure major differences among individual groups.
African American Business Enterprise participation remained a relatively small share of total city contracting dollars:
| Fiscal year | AABE share | AABE payments | Total M/WBE share |
|---|---|---|---|
| FY2022 | 3.1% | $16.2 million | 47.4% |
| FY2023 | 4.2% | $24.3 million | 50.8% |
| FY2024 | 3.5% | $20.9 million | 46.3% |
These figures do not, by themselves, prove that Black-owned firms were treated unlawfully or that the program failed. But they raise a historically important question:
The central accountability question
Did the businesses whose exclusion helped establish the legal and moral case for race-conscious public contracting receive durable access, capacity, prime-contract opportunities and business growth—or merely a small share of a program whose broader benefits flowed more heavily to other groups?
That distinction matters now because a race-neutral structure may no longer track outcomes by the same demographic categories or apply remedies directly to the groups for whom disparities were originally documented.
What the Sales-Tax Decline Does—and Does Not—Show
The 5.65% decline is evidence of weaker taxable economic activity on a comparable year-to-date basis. It does not establish that the SBEDA policy change caused the slowdown.
Sales-tax allocations are influenced by consumer spending, tourism, hospitality, construction, business purchases, inflation, refunds and the timing of tax reporting. Public contracting is only one part of the city’s economic system.
The relationship is therefore not a direct causal claim. It is an accountability test:
What City Hall should be able to demonstrate
If public purchasing is being used as an economic-development strategy, the city should be able to show whether the new policy is increasing local business formation, employment, payroll, taxable sales, prime-contract awards, business survival and access to capital.
Why the Timing Matters
San Antonio made its policy transition after years of strong sales-tax growth and record reported participation in city contracting. That provided a relatively favorable environment in which to change the program.
The first full test is now occurring during softer economic conditions. Small firms are generally more vulnerable to declining sales, delayed payments, higher borrowing costs and reduced access to working capital.
Black-owned firms may face an additional risk if the new race-neutral system no longer measures whether their participation, prime-contract access and business capacity are improving or deteriorating.
A program can appear successful in the aggregate while still failing to produce equal economic durability across every group.
The Questions Erik Walsh and City Hall Should Answer
- What specific legal analysis led the administration to conclude that the race-conscious program should be replaced rather than narrowed or further defended?
- What lawsuits or formal legal threats were identified, by whom and on what timeline?
- What baseline was established before the new race-neutral program began?
- Will the city continue publishing participation and payment outcomes for African American-owned businesses?
- How many Black-owned firms are receiving prime contracts rather than subcontracting work?
- Are Black-owned firms increasing their contract size, bonding capacity, payroll, profitability and ability to compete outside the program?
- How will the city determine whether a race-neutral policy is reducing or widening previously documented disparities?
- Has the administration connected procurement outcomes to sales-tax growth, local employment, business formation and business survival?
The Immediate Story
San Antonio’s immediate story is not that a policy change caused a 5.65% sales-tax decline.
It is that the city changed one of its most important small-business opportunity systems just before the local economy began showing measurable weakness.
The public now needs to know whether the city preserved enough demographic data, performance measures and enforcement tools to determine who is gaining, who is losing and whether the new policy is producing the inclusive economic growth officials promised.
A race-neutral policy should not produce race-blind accountability.
What Comes Next
The next several quarters will provide the first meaningful evidence about the revised program.
River Walk Magazine will be watching five indicators:
- Black-owned prime-contract awards and payments.
- The number of unique African American-owned vendors receiving work.
- Average contract size and subcontracting dependence.
- Business survival, employment and payroll growth.
- San Antonio sales-tax performance relative to other major Texas cities.
The test is not simply whether the city continues awarding contracts to small businesses. The test is whether businesses that historically faced exclusion are gaining the capacity to survive, grow and compete—especially when the broader economy is no longer expanding as quickly.
