SALES TAX AND GROWTH
Council says proposition could ease residents' burden
By Lori Thomason

Bullard voters face some unique choices in deciding the future of the city on Election Day.

With measures on the ballot for an emergency services district and $28.5 million school bond package getting a lot of attention, there's another proposal that could aid in Bullard's ability to attract tourism and fund infrastructure. And it would effectively put the city on a level playing field when it comes to sales tax collection rates.

That's what Bullard Mayor Pro-Tem A.W. Hines said about adding a proposition on the ballot for Bullard residents to decide upon.

"Every city around us can compete, but without any incentives or proper infrastructure, where does that leave Bullard?" he said.

But he hates the word tax.

"It's completely consumption based," Hines said. "Most of us have - unwittingly funded a lot of infrastructure and improvements in other cities - it's about time they reciprocated.

"Every time we shop in Tyler, we're funding their parks and streets, but we're not doing anything about ours," he said. "The sales tax in Bullard is the lowest in the area - which means every other surrounding city is taking advantage of taxable consumer goods and services to aid growth."

If approved by voters, the move would follow suit of surrounding cities like Tyler, Whitehouse, Troup and Jacksonville that have had what's commonly referred to as an economic development tax added to local sales tax for years.

The proposition is the adoption of a 4B sales and use tax to "undertake projects as described in the 4B section of article 5190.6 Texas Government Code."

According to the state comptroller 's office - which oversees the collection and distribution of the tax - use of the money includes: streets, roads, drainage, and other related transportation system improvements, water and sewer facilities, public parks, and park facilities and events, sports facilities including stadiums and ball parks, auditoriums, convention, tourist and exhibition facilities, open space improvements, learning centers, municipal buildings, museums and related stores, and projects to promote new or expanded business enterprises.

"Your citizens are already paying for the economic development of other cities," said John Villareal, from the state comptroller 's office, who spoke to the city council in May. "They should see little difference locally in what they spend, but they will reap the rewards of the investment.

"And tourism dollars, which the city expects to continue to increase, will directly benefit economic development."

Villareal made a presentation at the council meeting to educate council on the optional half-cent sales tax, telling council members what the money has done for other cities and how it can be spent to fund future growth.

Currently, Bullard retailers collect less in sales tax than all of the surrounding cities, because the other entities voted in the optional half-cent tax.

Tyler, Whitehouse, Troup and Jacksonville charge the state maximum of 8.25 percent. Bullard's rate is 7.75 percent.

The Texas state sales and use tax rate is 6.25 percent, but local taxing jurisdictions -- cities, counties, special purpose districts, and transit authorities -

The Facts

Currently, Bullard retailers collect less in sales tax than all of the surrounding cities, because the other entities voted in the optional half-cent tax.

Tyler, Whitehouse, Troup and Jacksonville charge the state maximum of 8.25 percent. Bullard's rate is 7.75 percent.

may also impose sales and use tax up to 2 percent for a total maximum combined rate of 8.25 percent.

Based on sales receipts from 2004, Bullard could generate about $46,000 more in yearly revenue. But predictions, Villareal said, make the reality much more abundant than what it was two years ago.

"You all know the growth in the area," he said. "This is a major thoroughfare, and Bullard is set up geographically to be in a very advantageous spot." He said the revenue would most likely triple in the next three years.

While Bullard didn't fare as well as it did last October in sales tax revenue, with $8,922.74 collected down about 4.5 percent from last October, that could be attributable to a some miscommunication on collection by one business.

The comptroller's office recently contacted the city with information that a local business was paying too much in sales tax and; therefore, the city is now obligated to pay back the money.

"We don't know which business it was or for how long a period it encompassed, we just know they're setting up a payment plan for us," said City Manager Larry Morgan. "We don't have to pay a lump sum."

The comptroller's office said the city has to pay $16,000 because of a technical glitch.

In northern Smith County, Lindale is again seeing an economic boost because of Lowe's and Wal-Mart Supercenter.

Lindale received $73,670 last October. This October the revenue increased to $126,805.

October sales tax distributions are from sales that occurred in August, and reflect the threeday sales tax "holiday."

The Comptroller's Office said the state took in $1.51 billion dollars in sales tax in September, a 13.7 percent increase over September 2005.

It sent $415.5 million in monthly sales tax payments to Texas cities, counties, transit systems and special purpose taxing districts, up 14.3 percent compared to last October. So far in 2006, local sales tax allocations are 14.7 percent ahead of last year.

The state has doled out $2.9 million so far this year, up from 2005 payments of$2.6 million

Since 1979, Texas law has allowed cities to form economic development corporations to attract businesses and create job opportunities.

The l989 Legislature amended the Development Corporation Act of 1979 to allow eligible cities the option of adopting a dedicated sales and use tax to fund industrial development projects - commonly referred to as a 4A tax. Further legislation in 1991 provided cities with a second form of sales tax to improve their appeal as places to live, work and visit, which is called a 4B tax.

"This is something we're more interested in," said council member Teresa Adams Wilks. "We're looking for funding that improves the quality of life for all of us, but allowing others to subsidize it, just like we do when we spend our money outside the city."

The 1991 Legislature added 4B to the act. It allows greater flexibility in the use of revenues. Generally, 4B expenditures are those that contribute to the quality of life in the community. Such projects include building parkrelated facilities, sports and athletic facilities, and tourism and facilities.

"It makes sound business sense to use the 4B to allow us to better provide for our growing community," said councilman Rodger Johnson. "Everyone who buys gasoline or groceries, eats at our restaurants or patronizes our stores can help give back to the city."