Considering an essentially painless way to generate more revenue, city leaders continue talks of raising the local sales tax by a half cent.
Revisiting the topic Jan. 5, the council seemed to agree that road maintenance and repair is among the best uses.
“Nobody likes the subject of taxes,” Mayor Kevin Holland said. “In this case, what we discussed in our retreat is that the county can come in – other entities can come in and claim it from us. That perked up me to listening closer, and I’m in agreement that street maintenance – that has been a priority of mine.”
Though the action would require voter approval, a representative from the State Comptroller’s Office has suggested the move, given that Friendswood’s rate, which is a half cent below the maximum allowed, is also lower than that of surrounding cities.
Most Texas cities, according to the State Comptroller’s Office, are taxing at the maximum rate of 2 percent, or 8.25 percent when combined with the state sales tax rate. Friendswood taxes at a rate of 1.5 percent.
State law allows for a variety of uses for a sales tax increase, including economic development, infrastructure improvements or crime control — or a combination of these uses.
Street maintenance appeared to be a priority among the council, which considered narrowing priorities down to three priorities.
“I might be presumptuous, but I think the first quarter cent is going to street repair,” Councilman Jim Hill said. “We just have to get on top of that.”
“It should specifically be used for basic infrastructure items,” Councilman John Scott agreed, “not any ‘wouldn’t it be nice if we had this or that.'”
“As we discussed during the budget process, it seems the roads get whatever is leftover at the end of the discussion,” he said. “It would certainly be nice to see roads put at the forefront because it is one thing we are absolutely required to provide for our citizens.”
“That would be helping our budget on an annual basis,” Holland said.
Also discussed was forming a committee to narrow down the focus and provide feedback on voter buy-in.
“Anything to do with taxes, I’d really like a group to spend time on it,” Councilman Steve Rockey said.
Councilman John Scott issued a caution with the “Someone else might come in and take it” pitch.
“It’s interesting when talking about CEDC that one of the big selling points pushed at least in the near term is the fact that you have a lower sales tax rate in the City of Friendswood,” Scott told fellow council members. “Now we’re going to go out and raise it so we can utilize it for whatever reason we deem appropriate.
“The roads are torn up by a small percentage of people that don’t live here,” he added, “because their utilizing our roadways because they are passing through or coming to visit – so as taxpayers we foot the bill for roads being used by non-residents. I think it’s fair to ask that they pay for them, so I can certainly support earmarking a quarter percent for the roads if that’s what we choose, but would be very cautious about how you go out and start trying to sell this.”
SALES TAX OPTIONS
Sales tax options for cities include a regular sales tax of 1 percent, which most cities in Texas have, along with the following:
– Sales tax for economic development. These revenues are done under “Option A,” in which revenue is turned over to a development corporation to carry out programs related to industrial development, business infrastructure and the promotion of new enterprise to create and retain jobs; or “Option B,” revenues are turned over to a development corporation for programs related to a wide variety of projects, including public parks and business development.
– Street maintenance sales tax. These can be one-eighth or one-fourth of 1 percent, and are used to repair and maintain existing city streets. The tax expires after four years without a new election.
– Municipal development corporation. These can be one-eighth, one-fourth, three-eighths or one-half of one percent. Revenues are used for job training, early childhood education, after-school programs, scholarships, literacy promotion and other projects.
– Municipal development “districts.” One-eighth, one-fourth, three-eighths or one-half of one percent. This option can also cover a city’s extra-territorial jurisdiction, and fund a variety of projects that include a civic center, auditorium or other projects.
– Fire control, prevention and emergency medical services district. One-eighth, one-fourth, three-eighths or one-half of 1 percent. The district can include all or any part of a city and finances the operation of fire control and EMS.
Options available for both cities and counties include:
– Sales tax for property tax relief. One-eighth, one-fourth, three-eighths or one half of one percent. Revenues are deposited into a city’s general revenue fund. Cities adopting it must reduce the effective and rollback property tax rates within the city.
– Crime control and prevention district tax. One-eighth, one-fourth, three-eighths or one-half of one percent. Revenues can be used for a wide variety of crime control and prevention programs.
– Venue tax “Stadium Bill.” One-eighth, one-fourth, three-eighths or one-half of one percent. One of several options to fund sports or community “venue” projects. Multiple cities and counties also can join to form a venue district.
– Metropolitan and Rapid Transit Authorities/Municipal Transit Departments. One-quarter, one-half or three-fourths of 1 percent, or 1 percent. Not offered statewide to all cities and general found in metro areas. Cities may join and in some cases withdraw from an authority with voter approval.