Tuesday, July 27, 2010

What about the Sales Tax

If you have been following me on FaceBook lately, you probably noticed that I don't favor the approach presented at the last council meeting for removing the end date on the ½ cent 4B economic development sales tax. I have even called it pandering pork barrel politics as usual. It's time for me to explain this in more detail.

Some of you may remember I was part of the opposition to the 4B sales tax for a long time. I worked against its passage in 1999, and started the site that became ConchoInfo.org as part of the campaign against the 2004 proposal. In the end we ended up with a much better sales tax than what was originally proposed and they have done a better than expected job of sticking to what they promised the voters. Some parts have not worked out well, but it has been a useful tool in at least a few cases. We have made better use of this economic development tax than the average city does.

One of my main objections to this type of sales tax is how it frequently becomes a “ candy store”. Projects are proposed and handed out on the basis of political factors such as getting the proposal passed or returning favors instead of what is good for economic development and community needs. It frequently amounts to pandering to local special interests in exchange for support and donations. The current projects added to the proposed extension come across that way to me.

The core reason for an economic development sales tax is to aid in the creation and retention of long term good paying jobs. Without an adequate water supply, jobs will not be created or retained, and paying for all the development costs out of property taxes or the water bill is also going to hurt economic and community development. The 4B sales tax is a good way to pay for at least part of that. In those cases where primary jobs that pay above average wages are created or retained, the city has good guidelines and procedures in place for using these 4B funds. Still needs work, and needs more local focus on stage 2 companies, but overall the city has seen benefit from these economic development investments.

There are uses authorized under a 4B tax that do not create primary jobs or high paying jobs. These include sports facilities, open space development, affordable housing, and some related retail developments and infrastructure projects. These don't create good paying or primary jobs. I can see that some projects of this type should be done, but these projects need to be prioritized so that the community as a whole gets the benefits where needed. And truthfully, many of these projects could and should become self sustaining or at least help pay their way. We should look at creating a public facilities corporation to help make that possible.

Looking long term, there are legitimate uses for the 4B sales tax besides developing water resources and creating high paying primary jobs. The short term goal of picking a couple projects to help get it passed does a disservice to the voters and our community. I'm not saying these projects are unworthy of consideration. Instead these projects need to compete against other similar projects on a level playing field based on the long term benefits they bring to the community as a whole. We should fund projects that can show benefit to the city for the long term. We need to think further than just until the next election cycle.

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