VON ORMY— On Monday August 18, 2014 Von Ormy Mayor Art Martinez de Vara issued his proposed 2015 city budget. In an historic first for any city in Bexar County, the budget proposes completely eliminating property taxes for residents of Von Ormy.
Even with the elimination of property taxes, the city's revenues are expected to increase 30% over its 2014 budget. Additionally, the budget conservatively projects $830,000 in reserves ending September of 2014.
Mayor Martinez de Vara told the Star, “this year’s budget focuses on tax relief, transparency and public safety.”
The budget calls for doubling the fire department's budget, increasing the city marshal's office presence by increasing funding by 50%, provides for an Animal Control Officer and a new Traffic Patrol Officer position and the purchase of a new patrol SUV.
Additionally, the 2015 Von Ormy budget calls for an additional $300,000 for the purchase of a municipal building, a playground in the city park and a new patrol SUV for the City Marshal's office. All of these capital expenditures are to be paid in cash from reserves to avoid any debt obligations.
Mayor Martinez de Vara told the Star, “in 2009 we established a goal of shifting the tax burden for operating the city from property taxes towards sales taxes. We did this because over 95% of sales taxes are paid by non-residents and we understood that we could increase sales tax revenue much faster than property tax revenue. Since that time we have increased sales tax revenue by over 400%. In order to have achieved the same revenue by property taxes we would have had to increase them by 300% from where we were in 2009.”
In order to wean itself off of reliance on property taxes the city avoided debt, established a "low fee, low tax" regulatory environment and reduced property taxes by roughly 10% or more each year. The city's low tax/low fee environment encouraged small business expansion that greatly increased the city's sales tax revenue.
Mayor Martinez de Vara recalls, "We began offering relief to Von Ormy tax payers at the height of the recession. The first year, when we reduced taxes by 10%, we were the only taxing jurisdiction in Bexar County to make a significant cut. In fact, most increased their taxes that year. I believe that government should not spend every penny it collects, rather we should spend what is necessary to deliver high quality core services to our residents. Excess taxation is unjust taxation." Without the city's pro-active economic growth policies, Von Ormy may not have benefited as much as it has from increased I-35 traffic that is due to the development of Eagle Ford Shale.
Mayor Martinez de Vara said, "Like most working class communities the greatest investment that most of our residents have made is in their land and homes. Many of our residents are on fixed incomes and property taxation is the single greatest threat to continued home ownership and the ability to pass the fruits of a lifetime of work onto the next generation."
“I hope we get this budget passed, so we can add a second city motto. 'Tax Free Since 2015," the Mayor said.
Von Ormy is not alone in seeking tax relief this year. Bexar County Judge Nelson Wolff recently proposed a cut in County property taxes, “We have rounded the corner in recovery from the economic recession. Our economy is strong as we see through the increase in our tax base, so I see cutting the tax rate as the only prudent thing to do for taxpayers.”
Since it incorporated in 2008, Von Ormy leaders have established a unique approach to municipal government that has come to be labeled by the media as a "Liberty City." The success of Von Ormy has led to several small communities in central Texas that have recently sought incorporation to follow this model of government, including Sandy Oaks, Kingsbury, Savannah Heights, Cowlick and Maxwell.
In addition to its "low tax, no fee" approach, Von Ormy has also prioritized the protection of its citizens' civil liberties. Von Ormy has no smoking ban, firework ban, gun restrictions or juvenile curfew. Mayor Martinez de Vara recalled, "The primary purpose of local government is the protection of individual rights and cities should shy away from limiting freedoms and focus on those things necessary to provide a higher quality of life for residents such as police protection, fire stations and litter control."
News of the proposal has resonated across the state. The Austin-American Statesman recently called Von Ormy “The freest little town in Texas.” The San Antonio Express-News dubbed Von Ormy the originator of the “Liberty City” movement—towns that focus on quality essential services, low taxes and minimal interference in the lives of its residents. Jess Fields, Senior Policy Analyst at the Center for Local Governance at the Texas Public Policy Foundation said of the proposal “by establishing smart policies such as abolishing the property tax, Von Ormy has positioned itself at the forefront of a movement to restore good governance at the local level.”
Eliminating property taxes would not be a first in Texas. Von Ormy would join a handful of other Texas cities that have eliminated the tax. Most notable among these is the City of Stafford which successfully eliminated property taxes in 1995 and is routinely listed in national lists of the best places to retire and start a small business because of its low tax environment.
Eliminating property taxes would not only provide residents tax relief, but could spur increased businesses investment in Von Ormy. Mayor Martinez de Vara said, “since the proposal came out, I’ve been receiving daily calls, emails and other inquiries from people looking to relocate here. The attention has been very positive for the city.”
Mayor Martinez de Vara also told the Star, “relying on sales taxes will require us to maintain higher reserves to hedge against fluctuations in sales tax collections. We have been doing this already for years as we have been chipping away at our property tax rate and shifting our tax burden off of our residents. This is really just the end of a lengthy process that we have been implanting over the last few years.”