If $10 million in new construction costs was diverted to reducing your property taxes, would you want Coppell to do that?
I want citizens to speak on this issue, not city officials who meet in the back room. I was disappointed to see an effort in our local paper to mislead voters by suggesting new construction projects do not affect their property taxes. They absolutely do. But the more important question is whether there are alternate uses of sales tax revenue funds that could, in fact, lower your property taxes (and the answer to that is a resounding “Yes!”). Citizens have not spoken directly on this, and they should. Here’s why.
The fundamental question to be considered is this: Can sales tax revenue lower my property taxes?*
- The newspaper headline reads “Are my Property Taxes Going to New Construction Projects?” The better question to ask is “Are my taxes going to fund new construction projects, and what else could those funds be used for?” Revenues to the city come from a variety of locations. The budget lists 8 different major categories (Page 21 of current City Budget). While some of them are restricted in their uses, all sources of funding are assets that belong to the citizens of Coppell, not just Property Tax, and should have the same level of care and diligence before being spent. Sales Tax revenue is a tax on citizens as well as non-citizens who do business in Coppell. That means taxes you pay in Coppell directly fund new construction projects. More importantly, they add cost pressure onto the property tax you already pay. To imply, as the headline does, the citizens should not worry about new construction projects because it is not funded from the general fund account, suggests that this money is “free” or somehow cheaper than other dollars – but all revenue generated is a government tax collected in our city, and should have the same level of care given in their spending. I understand this, and will apply the same level of care and diligence before spending dollars of any color.
- “How does new construction impact my property taxes?” If $14 million in new construction can be diverted to reducing your property taxes, would you want to do that? Most revenue is fungible, meaning that it can be used for a variety of uses. New construction projects absolutely siphon money in two important ways from the ongoing operating needs of the City, which IS funded by your property taxes. First, new construction diverts funds that could be used for maintenance and operations (see the by-laws of the Coppell Recreational Development Corporation, or CRDC). Second, after a new construction project is complete, they need operations and maintenance funds, and this long tail is not carefully planned or considered when approving funds for construction. For example, the proposed Arts Center is projected to have an operating loss of $277,000/Year, something that will be paid for with your tax dollars (Corgan Arts Center Operational Report, 7-20-17)**. While there are restricted funds for things like road repair, parks and recreation, and police support, the funding for each of these categories far exceeds the annual budget for each of these categories. That means that restricted use funds are used first, then general revenue funds (which your property taxes fund directly) are used to complete the funding.
- “Keeping the tax rate steady.” In the 5th paragraph of the article, the author uses a term that is meaningless. The tax rate number is used to calculate the property taxes you pay. By keeping the tax rate steady, your property taxes rise every time your assessment rises. If property taxes are kept steady, the tax rate has to fluctuate to even out the revenue received from the city. I ask you, the taxpayer: do you care what your tax rate is, or do you care how much you pay in property taxes? The effective tax rate accomplishes this, which is why I advocate the city use the effective tax rate (which the state requires the city to calculate and publish) in budget planning. As your representative, I will shine light on this and it will reduce your property taxes, I assure you.
- What is the reason to collect sales tax? The Article creates a false impression that “Sales Tax provides ‘Extras’ ”. Actually, that is not true at all. The money from the half cent sales tax goes into a fund that is controlled by the CRDC (See my post https://www.facebook.com/DavinForCoppell/posts/171867073643353 ) that money can be used for new projects BUT it can also be used for maintenance and operations for our parks, the CORE, hiking and biking trails, and other more basic things like greenways and open spaces. That is what citizens approved in 2013, and there has not been any broad community discussion on what are the priorities to use these funds for. That is unfortunate, but I will work to fix that.
Why does all this matter? Because the community has not come together to reach consensus on what new construction is important to pursue, nor explore alternative uses of spending of the sales tax revenue. Honestly, most citizens I speak with are not even aware of the pending $14 Million obligation for a new construction project, and I think we can do better.
*”Are My Property Taxes Going to New Construction Projects” Page 1, Citizens Advocate, April 27, 2018
** The Corgan Arts Center Operational Report, dated 7-20-2017, obtained from the City of Coppell through a public information request.