VON ORMY—Streets are costly necessities. So often an individual will traverse many a mile to their intended destinations without realizing the significant capital required to install such a convenience. Even when a pot hole is struck and the existence of a road is acknowledged a question of “how much would it cost to fix that hole,” never arises; instead, “why hasn’t the City fixed this yet,” is a far more common response. Whether analyzing construction or improvement, cities expend a significant amount of funds in Street Maintenance. With such being the case, efficient governments use discretion not only in reviewing bidders to complete the work, but moreover, what funding may be best utilized to pay for such an investment. Enter: Street Maintenance Sales Tax.
Formally known as a Municipal Sales and Use Tax for Street Maintenance, the ability to establish a specific fund for street improvements via sales tax is authorized by Chapter 327 of the Texas Tax Code. By assessing up to a 0.5% tax on most retail sales, municipalities levying a street maintenance sales tax are offered another means with which to attain revenue to address a municipal need. The obvious advantage to the additional sales tax is the burden of street maintenance costs is significantly lessened, if not removed, from a municipality’s operating budget. Additional space within the operating budget allows for new initiatives, projects and one-time expenditures. These benefits, though significant, are not however the most compelling incentive for adoption of a street maintenance sales tax. Instead, let us take a look at the manner in which municipal taxes are levied in general to realize the ultimate benefit of the added sales tax.
Ad Valorem, or property, taxes are the most common form of municipal taxation in the State of Texas. This tax is used to generate the funds that support day to day operations of any governmental institution. The method of assessment is rather straight-forward: if you own property in our municipality, you will require our municipal services; therefore, your taxes will pay toward this end. Even in the event of a capital improvement requiring a special tax rate for the issuance of a bond the philosophy is the same: you are here, you will benefit from this project; hence, your taxation will pay for your share of the use. What then of roads and major-thoroughfares? One cannot be so naïve as to think roadways and arteries throughout a municipality’s jurisdiction are utilized only by residents. An approach to taxation which considers residents the sole users of municipal roads is both misinformed and ill-advised. In contrast to ad valorem taxes however, the application of a sales and use tax such as the Street Maintenance Sales Tax is beset upon a much larger pool of responsible tax payers than just property- or even non-property owning residents… consumers
Any retail/consumer item identified by the State Comptroller as a taxable good (and most are) is privy to a sales and use tax. With this being said, all applicable consumer items within a municipality’s jurisdiction will automatically generate sales tax, and by extension, street maintenance funds, per purchase. When stopping at the local convenience store or gas station, it does not matter if the consumer is from the heart of the City or 100 miles away, local roads were used to arrive at that destination. And now, as snacks, soft-drinks and cheap sunglasses are purchased, by each, a portion of that sale is now going towards the maintenance of the very local roads the consumers prepare to return to. The beauty of the sales tax approach to street maintenance is that not only is the taxation equal among residents and non-residents alike, because the taxation applies to a larger band of tax-payer, that being any who pull off of local roads to purchase goods and services, the tax is much closer to a user-tax allowing municipal leaders to take the burden of service provision off of their constituents who are not solely responsible for the dilapidation of the roadways. A practical scenario for this situation can be witnessed every day in the City of Von Ormy; the small municipality of roughly 1,300 residents has been witness to a staggering amount of development as it resides on the cusp of the Eagle Ford Shale.
Like many rural communities in Medina, Atascosa, Frio and South Bexar County, the presence of heavy axle trucks within the City of Von Ormy has never been greater. With added weight comes added distress on existing, under-engineered, thoroughfares often leading to premature road failure. An attempt to raise taxes on property owners within these inundated areas to pay for road improvements would allow the responsible parties to enjoy higher quality roads while bearing none of the financial burden to attain them. Instead, with the application of a street maintenance sales tax, truckers are taxed for the improvement of road conditions each time they stop to purchase supplies and travel provisions. When viewed in this light, a street maintenance sales tax is not only equitable as it taxes all those participating the same, it is fair as it requires residents and non-residents alike to pay for a service each uses daily.
At the time of this writing the City of Von Ormy has placed the renewal of the municipality’s Street Maintenance Sales Tax on the ballot as Proposition 1. Voters should vote “yes” to renew.