Monday, May 31, 2010

Street Sales Tax

Among the things that come with summer, we have the start of the annual City budget process. At an overflow meeting of the Animal Services Board, City Manager Dominguez stated that we are looking at a $2.3 million shortfall this year. Unlike the feds, the city isn't allowed to "print" money. Some combination of new revenue and/or spending cuts will be required.

This Blog began as a site in opposition to the City's half-cent sales tax. In over a decade of opposing the tax, it was defeated three times, then approved by voters twice, last time for a twenty year term with specific projects part of what voters approved. At that time, we agreed it had changed from a multimillion open "slush fund" to a voter approved tax with satisfactory legal limits. We have not opposed the tax itself since.

It has been mentioned our existing authorization by voters is getting short enough to have an impact on our ability to issue bonds backed by the 4b tax. If Council wants to we can have something besides smoking on November's ballot.

Section 327 Tax Code allows us, if the voters approve, to designate one eighth cent of the tax we already pay to a Street Maintenance Tax. Even with a lower sales tax gross, this is about a million bucks a year. It might put off already approved projects a year or so. It would not solve our shortfall, but it could help.

A Street Maintenance tax can be part of a single ballot measure reducing the existing 4b tax by the same amount; we are maxed out, cannot simply add one-eighth cent. Regardless of the length of time we add to 4b in general, the Street tax part expires in 4 years. If we look at it in 4 years, we can reauthorize it; if it didn't work so well, we just let it die.

This special provision does not allow for construction of new streets, only maintenance of what we have. Council and staff have come close to pulling rabbits out of the budget hat to reduce ad valorem tax by a cent a year five years in a row. I will use an argument from the old days: putting some of street maintenance on sales tax will get revenue from people who use the streets but don't live here. It won't increase the tax paid by anyone, but it would give us about a million a year for pot-hole money.

Strikes me as worth a thought. The initiative for this must come from Council, not a petition. Voters still get the final say. If we don't at least give it a look, we are passing up an opportunity.


  1. The only reason there was not a shortfall in last years city budget is because the State of Texas accepted federal stimulus money which enabled the State of Texas to put off state wide financial cut backs.

    All Texas municipalities knew they would have to reduce their budgets this fiscal year. Most started planning months ago. Unfortunately San Angelo’s city manager has a tax and spend philosophy and poor financial planning skills.

    San Angelo city manager Harold Dominguez failed to heed the warning signs. Mr. Dominguez needs to be replaced by a more competent city manager.

  2. Anon, you might want to take a good look at other cities like Abilene which had a serious shortfall last year that is even worse this year. They have cut senior management positions. They are laying people off. They aren't the only West Texas city in bad shape. The stimulus money did pay for some special projects, but did not pay the regular bills such as Police, Fire, street maintenance, etc.. To say that stimulus money enabled cities to avoid budget problems last year plays very fast and loose with the facts.

    A $2.3 million shortfall out of a budget of over $100 million is a problem, but one that can be managed. By your reasoning, there likely isn't a competent city manager in all of West Texas. If you had paid attention you would realize that the only way they can know that there might be a $2.3 million shortfall is if they are already well into the planning cycle and have good preliminary figures.

  3. Anon, here I have to agree with JWT: we started last budget cycle with worse projections as to sales tax income. Which went down from there.

    The process is just beginning, we are decent enough to let new Council members be sworn in before saddling them with budget. Here I agree with Manager Harold Dominguez. All he is telling Council is: policy continues down this expenditure path and you don't give staff more income, we gonna be broke by Thanksgiving if not before.

    Now, these are some options. This is precisely Manager's job. If Council directs staff to make one egg count for two, they'll try. Our form of City Gov't, Council directs policy, staff tries to comply. Council wants the sun to rise in the west, staff will retire, consult with astronomers, and try to comply before informing Council, "Cain't be did". Staff is no more likely to succeed than did King Canute at turning back the tide, but my experience, they will try.

    OK, a little extreme example, but I hope you catch my drift. I've been around through a few City Managers and I am pretty tight-fisted on City spending myself. I find your characterization of Harold Dminguez as "tax and spend" a bit extreme as well.

    Could be wrong, please cite specifics.

  4. State level spending cuts were avoided last fiscal year (2009/10) because of the state accepted stimulus money. The stimulus money postponed cutbacks to all state departments and cutbacks in state money sent to municipalities such as San Angelo.

    Those are facts. As “they say,” facts are stubborn things.

  5. These "facts" still don't support your premise that San Angelo is behind on planning for a shortfall. These "facts" don't explain how San Angelo has avoided lay offs and cut backs on key services while Abilene and other West Texas cities are still in the middle of a multi-year budget crisis even with the help of "stimulus money."

  6. San Angelo has avoided nothing.