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May 4th Sales Tax Election

On Saturday, May 4th, Glen Rose voters will decide whether or not to re-allocate local sales taxes by eliminating the ½% 4B Economic Development Corporation (EDC) Sales Tax and increasing the municipal sales tax from 1% to 1 ½%.  Whether the proposition is approved or defeated, the tax rate will remain the same.  There will not be a tax increase.  The only thing that might change is how the revenue that is raised may be spent. 

LINK TO ELECTION NOTICE

Sales tax is an important revenue source in Texas.  The State imposes a 6 ¼% sales tax for its use and allows local governments to impose up to 2% for local use.  Due to recent changes in the State’s sales tax laws, the Glen Rose City Council decided to place the aforementioned ballot proposition before voters. 

In the past, cities were not allowed to collect more than 1% through a municipal sales tax (for use in a City’s General Fund) or ½% through various dedicated sales taxes.  To benefit from the full 2% available for local governments, the City of Glen Rose adopted a 1% general municipal sales tax in 1969, a ½% property tax relief sales tax in 1987, and a ½% 4B Economic Development Corporation sales tax in 2007. 

On September 1, 2015, House Bill 157 went into effect removing the caps on general and dedicated municipal sales tax rates.  As long as the 2% local sales tax limit isn’t violated, cities now have the freedom to adopt the local sales tax rates deemed most advantageous.  In holding elections to re-allocate rates, however, cities faced one risk.  What if the citizens voted to reduce one sales tax rate, but failed to approve the planned corresponding increase in the other sales tax rate?  Rather than re-allocating sales tax revenue, a city could end up losing it. 

This problem was solved on September 1, 2017, when House Bill 3046 went into effect allowing municipalities to lower one sales tax rate and increase another through a combined ballot proposition. Since then, several Texas cities have used this new provision to re-allocate local sales tax rates.

Last year, Glen Rose raised about $300,000 through its EDC sales tax.  State law mandates that 4B EDC sales tax revenues be spent on community and economic development projects.  During 2018, the Glen Rose EDC authorized funding for the following projects: $52,000 for a restroom remodel and drainage project at Oakdale Park, $9,718 for tables and chairs at Barnard’s Mill, $8,000 for a tanning bed and supplies for Rockin Hair Body and Soul Salon, and $1,500 for White Buffalo Mercantile.  Also, since the City’s purchase of Oakdale Park and the construction of the River Walk in 2010, the EDC has been making annual payments of about $205,000 on the roughly $3 million in debt that was incurred. (If the sales tax reallocation is approved, the City will begin making those payments.) 

Municipal sales tax revenues may be used to fund the various general fund operations that municipalities are authorized to perform, with one of the biggest expenditures often being street paving.  So, if you want to continue to set aside funds for community and economic development, vote “against” the ballot proposition.  If, instead, you want those funds used for general municipal operations, vote “for” the ballot proposition. Early voting begins on April 22nd.