Monday, November 14, 2005

Economic Development Flexibility

It's no secret that I opposed the economic development sales tax, but that is not my point here. The last election was a thorough airing of the issues, and I defer to the judgement of the electorate. While some results have been mixed, overall we have seen a passing grade on use of the fund. Matt Lewis has to have donated six figures of his time to administering the fund, and If Kathy Keane does as well running this as she did running the City Clerk's office, we will be blessed.

The law authorizing the tax requires that we use the fund as it was put to us on the ballot. The proponents were quite specific on ballot wording, thinking that would help pass the measure, and it probably did help. I now find myself arguing the case that we need greater flexibility.

The twenty year term was a bit of a surprise, and was argued pro and con even amongst the tax proponents. My thought is that since we did approve the tax for that term, we need a new plebiscite to allow greater flexibility in its use. Families do not “carve in stone” the family budget twenty years ahead, businesses have at best a general target twenty years out, in the real world changes beyond our control come to pass and we react to them.

I argued at the time the best thing San Angelo could do to attract business and industry in general was to lower our property tax rate, for years one of the highest in the state. This year we saw a small decrease in that rate, the first in a long time.

During and after the tax vote, Jim Turner and I have pointed out some things being done in Tyler, Texas, a city roughly our size in east Texas. Some particulars of their plan have interested City Council already. In sum, what Tyler has done is to use its economic development tax more for pay-as-you-go infrastucture improvements, lowering the burden on property tax. They have funded all sorts of nuts and bolts projects out of the development fund. In the process, over about ten years their ad valorem tax has declined from 55 cents to under 25 cents, currently the lowest in the state according to the Texas Municipal League.

Details of Tyler's plan are available at then click to “blueprint”. They are justifiably proud of what they have done and eager to share it for the asking. There are differences in our cities, for instance, being a stone's throw from an Interstate is something we cannot unilaterally do anything about. Tyler is demographically younger. Water is more a flooding problem than a supply problem for Tyler. I'm not saying we can take Tyler's “blueprint” off the shelf and apply it across the board, but their results certainly argue in favor of giving it a close look.

As an example, the single most common beef from taxpayers I hear is water rates. I suggested using part of this hundred million dollar fund to pay for the new water tower, an allowable use, IF approved by voters. That has come and gone, but it is an example of using the fund for infrastucture costs that would take items “off budget” and possibly let us reduce water rates and property taxes. The portion of the sales tax revenue dedicated to water conservation might be re-allocated, conservation has been so successful it is driving rates up. (See Regional Solutions, this Blog). We might use a small part of the fund to synchronize traffic lights, another chronic pain. State law allows use for infrastucture, not operating costs. Were we to approve it, big ticket items could move off the regular city budget, still get done, and leave room in the budget for reducing our high ad valorem rate.

If we start looking at possibilities now, we could put the question to the voters on an election coming up for very little cost. I hold that using the development tax to reduce ad valorem rates would favor long-term economic development.

I am not calling for a vote on the tax itself, that is to me a settled issue. I propose that as long as we have this half-cent tax, we give ourselves latitude to use it wisely.

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