Mayor blasts governor’s property tax plan, says it will increase taxes

In an article posted today on his web site, Mayor Travis Mitchell criticized Gov. Greg Abbott’s recently announced property tax proposal, calling it "political maneuvering" that "will actually raise local taxes" and jeopardize Kyle’s "long-term economic prosperity."

Earlier this month Abbott announced one of his top priorities for the 2019 legislative session would be to force cities to limit their annual property tax revenues to 2.5 percent above what they collected the previous year unless two thirds of their voters approved a higher amount. His plan would also prohibit a municipality or a school district from issuing bonds unless two-thirds of the voters approved the debt issuance in an election that attracted at least a third of the jurisdiction’s registered voters.

For the record, never in its history has Kyle had a municipal election in which a third of its registered voters cast ballots.

"Abbott’s plan is wrong for Texas," Mitchell wrote. "I only hope that voters see through the political gamesmanship coming from our state capitol.

"Unfortunately, Abbott’s plan is more about political maneuvering than sound fiscal policy," the mayor said. "Hidden beneath multiple layers of state budgetary complexity is a disturbing truth. Abbott’s ‘solution’ will actually raise local taxes, not lower them. And it will do so in a way that dramatically reduces both transparency and quality of service."

Mitchell cited examples showing how Abbott’s plans could cripple the operations of both city government and the Hays Consolidated School District.

Later this year, according to the mayor, the city will begin work on the expansion of its wastewater treatment plant, the design and construction of which has been mandated by the Texas Commission on Environmental Quality. "If we are not able to complete the project to their specifications and within the proper schedule, TCEQ will either fine the city or, perhaps, take over our plant," Mitchell wrote. He said the expansion costs will be financed with cash on hand combined with developer contributions. But, he added, the city will still have to borrow money, through the issuance of Certificate of Obligation bonds, to bridge the gap between the actual construction and the time the city receives those developer contributions. The contributions would be used to offset the loans.

Currently, the only requirement for issuing CO bonds is for a majority of the city council to approve a measure to do so. However, according to Mitchell, if the governor has his way, the city would have to conduct an election in which one third of the registered voters cast ballots and 67 percent of them approved the bond proposal. By comparison, in modern-day politics, a "landslide" win is one in which one side in a two-sided election attracts 58 percent of the vote.

Should either benchmark — the two-thirds approval or the 33 percent voter turnout — not materialize, the proposal would fail. In that almost certain outcome, Mitchell wrote, "The city would default on its obligation to serve entitled future developments, would enter into a growth moratorium, and Kyle’s prospects at long-term economic prosperity would immediately be in jeopardy."

Mitchell also pointed out, had Abbott’s plan been in effect last year, the Hays CSD bond proposal for a third high school and two elementary schools would have failed because it received 65 percent voter approval, 2 percent below Abbott’s recommended minimum, and only 4 percent of the registered voters cast ballots, 29 percent less than what the governor’s plan would require.

You can read Mitchell’s entire article here.

Secede!!!

The city’s Economic Development & Tourism Board received two separate reports during its meeting today at the Seton Medical Center, one on building permits and the other an update on the effort to make Kyle-Buda a triple freeport area, without realizing, I think, the two items are intrinsically linked. In fact, the two items weren’t even together on the board’s agenda; they were separated by three other items although they both came under the heading of "Economic Development Updates."

On the subject of building permits, Diana Torres, the city’s director of Economic Development, said residential permits were going great, but commercial permits seemed to be stalling. After cautioning the board that apartment complexes count as commercial permits, Torres said the city is averaging four commercial permits a month, compared to five a month in 2014 (she did not provide numbers for last year).

Residential permits, however, "are way up," she said. The city averaged granting 62.83 residential permits per month., she said compared to 54.33 this time last year and 48.8 the year before that. In 2013, she said the number was 21.8, so essentially that figure has ballooned to three times its size in three years.

And yet, in the two years I have lived here, this city has not landed even one major non-retail economic development project. And one of the convincing arguments for that is because we are not a triple freeport area.

I have discussed triple freeport at length before but, in short, it is an economic development tool that exempts from taxation certain goods a company may have at its facility for less than six months. It most commonly affects businesses that assemble parts into a product that is then shipped out and allows those parts to be exempt from taxation. If this exemption is granted by an area’s three main taxing entities — the city, the county and the school district — then that area is known as a triple freeport area. Most, if not nearly all, businesses eligible for such an exemption that are looking for new locations will not even consider an area that is not designated triple freeport. Here, both the city and the country have granted the exemption; the school district, which levies the largest share of taxes in any Texas community, has not.

Subtle pressure has been applied to the Hays Consolidated School District board to grant such an exemption but so far those applying the pressure have been arguing facts, (i.e., the district will not lose any money by granting the exemption), that are irrelevant to the board. I am convinced the school board is, if not dominated by, at least influenced the strongest by no-growth advocates. Their argument is the school board’s sole interest should be education and that they were not tasked with promoting economic development so they should play no role in promoting economic development. The money argument does not counteract that.

So what to do? One could argue that a strategy could be developed to counteract the board’s point of view. But that rarely works. I have always found that, in any political battle, the side that sets the agenda wins. So one could try to argue the school district’s position is wrong, but you are simply arguing their position, not one of your own.

I am convinced that if Kyle leaders really believe a triple freeport designation will significantly alter the economic development landscape for the better, they should begin an effort immediately to secede from the Hays Consolidated School District to form a Kyle Independent School District, with its own board that has the ability to grant the exemption.

I am also convinced that even the serious threat to break away would force the Hays school board to reconsider and grant the exemption. And, if it doesn’t, the argument could be made that Kyle students would be better served by a locally controlled school district.