Taxing Matters

Dr. Malcolm Cross
Dr. Malcolm Cross

The special called Stephenville City Council meeting of 9/20/16, called to set the property tax rate for the 2016-2017 fiscal year, was one of the most fascinating and educational meetings I’ve ever witnessed. 

To watch a replay on YouTube is to get an excellent lesson in public finance and civics.  You should be able to watch the relevant video here:

The question before the council was whether to leave the tax rate at 49 cents per assessed $100 valuation, or cut the tax rate to 48.5 cents.  The city council voted 5-4, with the Mayor casting the deciding vote, to keep the tax rate as is.

Those supporting the proposed tax cut noted when the council voted to raise the tax rate from 48.5 cents to 49.5 cents in 2013, the increase was widely and loudly denounced as being unnecessary—the 48.5 cent tax rate was sufficient then, and sufficient now (left unsaid is that several supporters of the tax rate increase in 2013, myself included, lost the following city council elections to those who had supported the maintenance of the 48.5 cent rate).

I truly admire those council members who, having been elected to oppose the 2013 tax increase, are still committed to cutting it back to the 48.5 cent rate, above which they said it must not go.  They’re to be commended not only for their adherence to principle, but also for noting that to maintain the current rate is, in fact, to actually increase taxes.  One can have a tax increase without a tax rate increase because of the increase in property values.  In fact, if property values go up high enough and rapidly enough, one can actually cut the tax rate and still get more revenue.

But I’m especially fascinated with the arguments of those council members who, once having opposed the 2013 tax rate and supported the maintenance of the 48.5 cent rate, now argue the property tax can’t be cut back to 48.5 cents after all.  They agree maintenance of the 49 cent rate constitutes a tax increase, if not a tax rate increase, but they say it’s necessary to make progress on road repair, other infrastructure maintenance and repair and debt service.  Having once made similar arguments myself – obviously futilely, unconvincingly and ineffectively – I’m glad others who once rejected my arguments are now somewhat in agreement.

But I’d still like to see ways and means of raising more revenue while actually cutting tax rates, and even taxes.  But how to do so?  The obvious answer is through the sort of economic development policies which will produce more jobs and promote economic growth and a larger tax base, which will in turn lower the per capita tax burden.  Quite frankly, I’ve always thought one of the Mayor’s best contributions to city governance was to create more discussion about economic development policies, even if they were not always consistent with my own devotion to achieving economic development through the application of free market activities.

As the SEDA’s work gets underway, we’ll be better able to see how effective it and the city council become in promoting economic development.  Several articles in the Flash and the Empire-Tribune report on ideas currently being considered.  One idea, discussed in the Flash at is to give city funds in the form of matching grants to local businesses to help pay for improvements in their exteriors and hence enhance their “curb appeal,” and presumably attract more customers.  The city council must, of course, approve the expenditures, and each taxpayer will have to decide for himself whether such aid to local businesses is wise.  Given my own free market inclinations, I don’t like such aid to businesses, but I suspect I’m in the minority here.

Nor do I like another proposal also mentioned by the Flash—a request to the SEDA from a local business for a grant with which to buy more equipment.  To me, at least, the lack of fairness in giving one business money without giving it to others is obvious, although I’ve learned that what’s obvious to me is not necessarily obvious to the majority. But whether governments should give out this aid, whether other businesses will cry foul at the idea that one business should get aid when others don’t, whether the SEDA board will recommend the expenditure, and whether the city council will approve it remain to be seen.  The Empire-Tribune also discusses this issue here:

But one thing seems certain:  For the foreseeable future, taxes will continue to rise as the cost of meeting the needs of the city rises too.  Whatever the worth of the current economic development policies under discussion, their cost, as well as the costs of future policies, will keep taxes higher than might otherwise be the case.  Perhaps someday a successful economic development program will permit a future city council to not only cut tax rates, but cut taxes as well.  But for the time being, it costs money now to make money in the future.

Malcolm L. Cross has lived in Stephenville and taught politics and government at Tarleton since 1987. His political and civic activities include service on the Stephenville City Council (2000-2014) and on the Erath County Republican Executive Committee (1990 to the present).  He was Mayor Pro Tem of Stephenville from 2008 to 2014.  He is a member of St. Luke’s Episcopal Church and the Stephenville Rotary Club, and does volunteer work for the Boy Scouts of America. Views expressed in this column are his and do not reflect those of The Flash as a whole.

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