Thursday, August 20, 2009

Storm over storm water rates

Tuesday's Council meeting was a long day, much of it taken up with the storm water program rate structure. I have been following this as closely as I can since the public meetings last March. It ain't perfect, but I like what we have now a whole lot better than what I was looking at in March. I like it better than what was first presented Tuesday morning.

First let me explain "tiers". The original back in March was going to go by straight square footage, each property paying flat 15 cents per. The tiers group properties by size, for instance, tier three commercial is 15001-50,000sq ft. It has right at a quarter of all commercial lots. They use Dairy Queen on Sherwood as an example. There are 4 residential tiers and six non-residential tiers.

On residential, the highest rate will be $5/month, for houses with over 3,000 sq. ft. OF ROOF. In fact if you have a 3200 Sq ft two story and get a tier 4 $5 billing, call and tell them. They have a Google-like system and can check that from the desk and adjust your tier. Over 55% of residences will be in tiers 1 or 2, at $2 and $3 respectively. The bill will go to the owner, it will not be a tack-on to residential water bills. If you rent a house, as I do, the owner gets the bill. Unlike property taxes, this will apply to non-profits, churches, it will apply to vacant buildings, virtually everything except the federal building downtown. Yes, as usual the feds exempt themselves from that which they impose on us. Apartments are in "non-residential", which sounds absurd and accounts for my preference for the term "commercial".

In the commercial tiers, the first three contain 87% of all affected properties. The tier 3 rate is $30/month, pretty close to the average for that tier. Likewise tiers 4 and 5 are very close to the average for their tiers. Then we come to tier 6 over 500,000 sq. ft.: the $500/mo is nowhere close to the average of $1400 they would pay in straight sq. footage billing. How can this be?

Well frankly, tiers 1 and 2 at $7.50 and $15 respectively are getting hosed. Any business at the low end of the first 5 tiers is getting hosed a bit too. How can this be fair? Best answer I can give you is; it really isn't.

Let me fall back to the public hearings in March. I had made comment that there were unmandated capital projects we could live without and in fact, those projects have been scaled back some. As we were walking out I ended up talking to, well, one of the major car dealers in town. He had already computed his sq footage times 15 cents and I was talking to a genuinely frightened man. He told me bluntly that if he got hit with the full sq. footage charge contemplated then, he was out of business. Given the state of the auto industry, I don't think he was exaggerating at all.

There are only 22 tier 6 properties. They include the asphalt intensive businesses of car dealers and Sunset Mall for instance. The city website uses Wal-Mart Supercenter West as an example, and they could probably pay full freight and only marginally raise prices on each of the tens of thousands of items they sell. The sense of Council, was that the tier 6 full freight fee could break a good many tier 6 businesses, with accompanying loss of jobs. Other hand, the higher-than-sq-footage fees for the lower 3 tiers were unlikely to break businesses.

Some public comment before the lunch break, including yours truly, suggested the presented fees for the lower three tiers, the $10, $20, and $50 was too much burden and too much subsidy. After the break, 5 and 6 had gone up, and the first four down. The $10, $20 and $50 ended up as $7.50, $15 and $30. Still a subsidy package, which does not tickle my libertarian soul, but neither does higher unemployment.

The city website has all the numbers, if you care to look. Opening page click Stormwater information, next page click, rate facts and stormwater facts.

Understand, this is not yet a done deal. The $500 for tier 6 is not only way under the average, it is below the minimum in real sq footage for that tier. If you think this is out of line, show up and stand on your hind legs and say so, but time is short.

It has been said, and I would agree, this should have been started many years ago. Now think back 5, 10 years. How many voters would have howled at the moon about unnecessary taxes? Fiscally responsible, yes; but I don't believe it would have been politically possible. Reality now is, we are staring at a short deadline. If we don't have something going by the New Year, it's likely TCEQ and EPA will move us from 305B (watch list) to 303B. Then they just walk in and tell us "You will do X, Y, and Z". They might let us decide how to pay for it. If they're in a good mood, but they seldom are. If you have a better plan, share it with us quickly.

Budget Question (updated)

The City government is in the middle of its annual budget process and this one continues the tradition of a long, drawn out affair that is entertaining to some political junkies. It looks like the final tax rate will be down by about $.005 per hundred after all the smoke clears, which will still leave us with one of the highest tax rates in the state of Texas (Ft. Worth is still ahead of us, not sure if anyone else is.) The city website has the proposed budget online, and it is full of good information such as 52% of the budget is for public safety, and 74% of the city government expenditures are for personnel. You can go through the 50 pages and quibble about this expenditure and that revenue source and who should pay for utilities at the golf course, but we really need to get to the most fundamental question to be answered for taxpayers and stakeholders of San Angelo. San Angelo's property tax rate is currently $.8275 per $100 (about a $.04 in the last 4 years.) Compare this to $.6854 for Abilene, $.4464 for Lubbock, $.4859 for Midland, $.56229 for Odessa, and $.65 for Victoria. Forget about Tyler, which has a tax rate of $.204. The question that needs to be answered is “Why is our tax rate in the top 5 Texas wide?”

I have some ideas, but I am waiting for answers.

An updated P.S. When you add in the storm water fee, it gets even worse. When you look at the impact on the local economy and community, every dollar of revenue the city collects whether it's sales tax, property tax, a permit fee, utility fee, etc. it amounts to a tax. This new storm water fee is no different. Using the numbers I have heard at the last few council meetings during the budget discussions, a one cent difference in the property tax rate is about $330,000. They tell us the new storm water fee must collect $2.9million so we can meet federal mandates. That is equivalent to about an 8.8 cent increase in the property tax rate. I'm sure it's necessary. I know there are not a lot of choices out there, but this amounts to pretty much the same as an over 10% increase in city property taxes on property owners in San Angelo. When we include the storm water requirements in the total tax bill we could well be the highest taxed city in the state. Do we really want to be number one?