Thursday, October 23, 2014

CITY COUNCIL USES LOOPHOLE TO RETAIN TAXES



By Staff Writer
VON ORMY— Benjamin Franklin once said “the only things certain in life are death and taxes.”  This adage remains true for residents of Von Ormy. At a special meeting of the Von Ormy City Council held on September 29, 2014 to set the 2014 tax rate and budget, the Council voted 3-2 to reject the Mayor’s proposal to eliminate property taxes and voting instead for a budget that raised the proposed property tax from zero to $0.243 per $100 valuation.  The move met with jeers and catcalls from angry residents as it was accomplished without notice to taxpayers and without a formal vote. 
     State law requires every city to pass a tax rate before September 30, 2014 and requires cities to notify taxpayers of the proposed rate.  This year Mayor Art Martinez de Vara proposed a rate of zero due to dramatic increases in revenue from sales taxes. 
      At the meeting, a motion was made by Mayor Pro Tem Sally Martinez and seconded by Councilwoman Debbie Ivy to set the rate at zero.  The motion was opposed by Councilmembers Jacqueline Goede, Carmina Aguilar and Verna Hernandez. 
    City Attorney Woody Wilson explained to the council that state law requires the city to set a tax rate and the only lawful tax rate that could be passed was zero since no notice had been provided by the dissenting councilmember's to  the public of an alternative higher rate. 
     Councilmembers Jacqueline Goede, Carmina Aguilar and Verna Hernandez, comprising a majority of the Council, declined to set a tax rate in order to trigger a loophole in the law that sets a default tax rate in the event that a City Council fails to adopt a rate as required by law.
     After public statements by the three Councilmembers that they intended to raise taxes by this method, Mayor Martinez de Vara objected to the “tax increase by inaction” stating that “we have an ethical obligation to follow the law and set a tax rate as proscribed by it, our residents expect us to follow the process proscribed by law” He later told the Star, “retaining the property tax by using a loophole violates the spirit of the law because it did not provide our residents notice or an opportunity to come speak on the proposed tax hike.  Most are going to be in for a surprise when they get their tax bill.  I believe they should have provided residents notice of their objection to a zero tax rate and their intention to raise taxes.” 
     Long time resident Charlie Brown was at the meeting and told the Star, “The success that Von Ormy has achieved with low taxes should be continued so that we may grow and add cities amenities and services. The short sightedness of some of the present council needs to be addressed.  When you find yourself being pick pocketed, the first thing you need to do is get their hand out of your pocket.”
    City Clerk Julia Hernandez explained to the Council that due to the timing of the maneuver, Von Ormy tax payers will likely be receiving a second tax bill this year containing the city’s unexpected property tax and that the city will have to bear the cost of mailing the second notice.
      The additional revenue generated by the retention of a property tax was left unallocated, as the city’s budget was fully funded without it. 
     Mayor Pro Tem Sally Martinez called the move “irresponsible” and asked “why should we tax our residents for no reason?  We do not need this money this year and it will only go unused into our reserve.  We should have a zero tax this year and if we need it in the future we can bring it back at that time.”
     The opponents explained their opposition to eliminating property taxes was due to the fact that, “we might need to borrow against the money someday.”  Government debt instruments, such as bonds, are typically secured by liens against property taxes.
      Mayor Martinez de Vara responded by stating, “if at some point in the future we need to go into debt and issue a bond we will take that to the voters and have them decide if they wish to take upon that debt and tax for whatever is proposed in the bond.  We do not need to hold onto a needless tax to secure our ability to issue debt without voter approval.  It’s not our money, it our residents’ money and we should only take it if we need it. This year we don’t need it.” 
    Von Ormy was poised to be the first city to eliminate property taxes in Bexar County, a distinction taken by Sandy Oaks a few weeks earlier when it set a zero tax rate. 
     Councilwoman Debbie Ivy told the Star, “It was frustrating to me that the Council did not approve the Mayor's proposed elimination of our property tax.  With the exponential rise in sales tax revenues since incorporation 5 years ago, we had the opportunity to give a break to our homeowners, which did not amount to a large budget item,  while growing the city services through these additional funding sources.  Von Ormy has been a model for other small town hopefuls and we are being watched because of our ability to form the city and offer city services such as police and fire services and if we are to continue to be forward-thinking, I think it is important to send that message to others and our residents that Von Ormy is a progressive place to put down roots, whether it is owning a home or opening a business.  Supporting our new fire station is important as well and this has also met with resistance.” 
    The other issue hotly debated was whether to approve Mayor Martinez de Vara’s proposal to increase funding to the Jarret Volunteer Fire Department from $20,000 to $42, 000.   The Von Ormy City Council gave preliminary approval in July to provide Jarret VFD $42,000 to assist them with the cost of the new fire station in the city.  The additional $22,000 was proposed to replace funds provided by the Emergency Services District No. 5 (ESD 5).    ESD 5 recently reduced its financial support for the station due to budgetary constraints.
     ESD 5 Commissioner and Von Ormy resident Alex Quintanilla spoke against the proposal to provide Jarret with $42,000 citing his opinion that the new fire station was too costly and noting that the City of Somerset does not provide funding for Somerset Fire Department.   Jarret representative Rebecca Salinas responded and explained to the council that the additional costs to the station were largely due to requirements of the U.S. Dept. of Agriculture loan they received that require building materials to be American made, union shops used and additional oversight; and that the additional costs are being paid for by Jarret VFD which is paying approximately 1/3 of the cost.  Jarret representatives also stressed that with the ESD reducing its contribution, they hoped the City would maintain its commitment.   She also noted that any additional funds would go towards equipment and training above and beyond what the ESD can provide.
     The proposal failed 2-3 with Councilmembers Ivy and Martinez in support of increased funding and Councilmembers Hernandez, Aguilar and Goede opposed.
     Mayor Pro Tem Sally Martinez  said, “you cannot place a dollar amount on someone’s life.  This fire station will save lives in our community by being on average 5 minutes closer.  Sometimes 5 minutes is the difference between life and death, or the difference between a contained fire and  the loss of your home.  We have plenty of money in this budget, over $180,000 in unallocated funds, plus and additional $800,000 in carry over from this year.  We should support our volunteer fire department because with these extra funds they will be better equipped and trained to respond to help us. We, and our residents, are the ones who are hurt by unnecessary budget cuts, not the department.” 
     The City’s fiscal year begins October 1 and the budget that was passed will be in effect for the 2014-2015 fiscal year.
     With the retention of property taxes the city budget grows by 40% over last year to a record $771,000.00 of which 24% are unallocated. 
     The City’s budget retained the Mayor’s proposed capital improvement projects including a new vehicle for the City Marshal’s Office, a playground in the park, $50,000 for the emergency reserve fund, park amenities and street resurfacing for Von Ormy Rd., Benton City Rd. and Hernandez Lane.
    

    


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