Sales Tax 2010-AG110301MEMORANDUM
March 1, 2011
TO: Mayor & City Council
FROM: Clay Phillips, City Manager
SUBJECT: 1 /4 -cent Sales Tax Election
The November 2011 election date is fast approaching. With it comes the need to discuss
the re- authorization of the' /4 -cent sales taxes for both the Crime Control District and
Street Maintenance issues. Together, these sales tax initiatives provide over $5,000,000
in revenue on an annual basis.
Collections for the Street Maintenance sales tax will cease on April 1, 2012. Assuming
voters approve the measure the tax must be re- authorized at the November 2011 election
to avoid losing three months of revenue. This will enable the tax to continue
uninterrupted for another four -year period. The Council might also consider asking one
of our elected representatives in Austin to introduce legislation that either removes the
sunset provision altogether or extends the sunset period to a longer term similar to the
term options available regarding the Crime Control District.
The Crime Control District does not actually sunset until April 1, 2012. However, the
City Attorney has determined that we can re- authorize this sales tax at the same election
in November of 2011 when the Street Maintenance sales tax will be considered for re-
authorization. This approach would save the City the expense of holding elections in
back -to -back years. The Council could also consider asking the voters to re- authorize the
Crime control district for a longer period of time eliminating the need to have the issue
considered every five years. The term of the Crime Control district could be increased
from the current five years to 10, 15, or 20 years. In any event, sales tax collections for
the current in -force Crime Control District would not end until 2012 as described even if
voters do not re- authorize the collection of the tax in November 2011.
The merits and advantages of these sales tax revenues are well understood by the
Council. Staff estimates that 65% of our total sales tax revenues are generated from our
industrial businesses primarily on the west side of our community. This statistic suggests
that someone other than our homeowners is paying this non - traditional sales tax. This
exportation of the tax burden should be viewed by our residents as a very positive fact.
The dedicated revenue streams for the Crime Control Districts and Street Maintenance
alleviate pressure from the General Fund to provide the necessary funding to provide the
1 /4 -cent Sales Tax Re- authorization
March 1, 2011
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services associated with each issue. Property taxes would rise or services would be
reduced should either sales tax fail to be re- authorized. Finally, the taxes are not new.
They are currently being collected. These initiatives will not be raising taxes on any
segment of our community.
Attached is information concerning the items that have been or are planned to be funded
to date by the' /4 -cent sales taxes. Staff will be available to discuss both of these sales tax
issues in your Work Session on Tuesday.