Tuesday, February 5, 2013


By Chris Marrou    

SAN ANTONIO—Over the psst four years, Von Ormy has established a new model for government funding in Bexar County.  There are few means by which a municipality can raise revenue.  Cities in the State of Texas primarily draw their revenue from taxation.  A tax is a financial charge imposed upon an individual, legal entity, or property owner by a governmental entity such that failure to pay is punishable by law.  It is not a voluntary payment or donation, but an enforced contribution, whether under the name of tax, toll, fee, duty, custom, excise, subsidy, or other name.  If a private citizen attempted the same thing, it would be called robbery or extortion, so cities should be very careful how and when they use this power.
     Taxation comes in many forms, of course.  In Texas, the taxation of an individual’s property is termed an ad valorem (“by value”) tax.  Bureaucratic requirements that require residents to abide by certain building codes that require inspection and permitting fees is a regulatory tax.  Even citations issued as a result of violations of municipal ordinances and codes are viewed as a behavioral tax:  see Chief Justice Robert’s Opinion on the Affordable Care Act (Nat. Fed. of Independent Business v. Sebelius, 2012).  So then, with taxation of her residents serving as the only means with which to generate municipal revenue, what happens to a city which chooses to vastly limit those instances in which a tax is applied?  Look at Von Ormy.
     At $0.288/$100.00 valuation, Von Ormy imposes the second lowest property tax in Bexar County.  In order to preserve the health and well-being of her citizens a minimalist bureaucracy has been adopted requiring food and beverage and health permits, but these State-imposed regulations are offered at a pass-through cost to merchants, with the city paying all proceeds to contractors performing the inspections.  Relying almost solely upon sales tax revenue, the City of Von Ormy has operated with the implicit understanding that commercial activity within the municipality would be sufficient to support the government needs of Von Ormy residents.  As one might imagine, such a radical approach to governance has consistently drawn the ire of those from established municipalities, which constantly try to raise the maximum possible revenue from taxpayers short of causing open rebellion and then fund unnecessary projects that sometimes even oppose taxpayer interests. 
     Since incorporation in 2008, Von Ormy’s city leaders have been criticized by certain Bexar County Commissioners that their approach to governance, specifically municipal taxation, was too lax.  These were the county officials who spent $175 million of taxpayer money to provide a venue for the San Antonio Spurs after the City of San Antonio spent $247 million in taxpayer money for the Alamodome to house the same team, which the Spurs grew tired of after a few years (to force the Alamodome on citizens, the City demolished the Hemisfair Arena, which had been built in 1967 for only a few million).
     To outsiders, the future of the newly incorporated municipality was constantly described as ‘doom and gloom’ if the administration stayed true to its belief of “limited government = limited taxation.”  Now, five years after the external political pressures, the City of Von Ormy still embraces its approach to taxation and, to the surprise of no one within the city, continues to flourish.
     Capitalizing on increased traffic counts from the Eagle Ford Shale boom, Von Ormy has emphasized that its economic development interests focus on attracting retail and wholesale commercial activities that generates a collectible sales tax.  Over this past summer, city leaders streamlined annexation proceedings and development implements in order to lure the pinnacle of full-service truck stops: Pilot Flying J’s.  Now open, Pilot Flying J’s and the Subway and Cinnabon it supports have increased Von Ormy’s sales tax collection rates almost 30 percent overnight.  As adopted, Von Ormy’s total municipal budget was a meager $300,000.  Having closed the first quarter of the 2013 fiscal year, the city has already collected 40 percent of the adopted budget.  Understanding limited funds are required to operate limited governance, the city continues to post remarkably efficient expenditures.  To match their revenue surpluses through the fourth quarter Von Ormy has expended only twelve percent of its general fund balance!  And what of the gains (or what some might call profits) what happens when a government is so efficient?  Highly paid administrators?  Incredibly ornate municipal offices? Sports arenas?  Saturated Council travel expenses?  No. In Von Ormy the answer is infrastructure. 
Von Ormy maintains and more over defends its low cost of living and its low taxation policies and thrives on a “pay as you go” financing method.  By living within its means the city carries a minimal amount of debt and is now beginning to pour its surplus into infrastructure such as a municipal park, land for a new fire station to be erected in conjunction with Emergency Services District funding, upgrading existing water lines and adding waste water lines—all those things that a municipality needs to ensure an enviable quality of life for its residents. By contrast, the City of San Antonio spends 15 cents of every dollar it receives simply paying interest on borrowed money – some $300 million a year. We think it makes more sense to have the money before we spend it.
     By operating to ensure the success of a moderate but growing retail and service sector, Von Ormy has alleviated the burden of excessive government and focused on the provision and expansion of core services.  In the face of nay-sayers and in spite of a slowing economy which has all but destroyed consumer confidence, Von Ormy grows thanks to those same philosophies which have been the source of debate since its inception.  While pundits and political candidates from either party may continue to question Von Ormy’s approach to limited governance, there will remain one unequivocal winner in this situation: the Von Ormy taxpayer.

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