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MEANDERINGS BY ANN: Our Tax Dollars-Yours and Mine

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Joined: Sep 08 2014
Location: Coleman, TX
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    Posted: Oct 01 2016 at 9:36am
MEANDERINGS BY ANN: Our Tax Dollars--Yours and Mine.

I’m on thin ice with this one, folks. But when you’ve earned the reputation of being a tax dollar watch-dog, you have to sometimes bite the bullet and make every effort not to be biased on who you “pick on,” as some would have it. When ideas for unusually large amounts of our tax dollars are being tossed around, my antennae start quivering. You have to just tell it like you see it, and let the chips fall where they may.

The main source of tax dollars the city of Coleman benefits from is property (ad valorem) taxes. This property tax can be as much as is allowed by state government (currently $1.50/$100), not taking into consideration effective rates, roll-back rates, blah blah blah. Our property tax rate as of October 1, 2016, will be $.52126/$100 valuation. The Maintenance and Operating (M&O) portion of the tax is $.24671. The Interest and Sinking (I&S) portion of the tax is $.27455. How the I&S property tax rate is arrived at and then added to our M&O property tax is another matter that I won’t go into at the moment. Let’s just say that you are not only paying for the pleasure of having municipally owned electric service with the high electric bill you get each month but also with a nice percent of this I&S property tax figure.

Another source of taxes for the city is the sales tax we pay when buying eligible taxable items in Coleman. That’s the 8.25% that is added to our total purchase on our receipt. That 8.25% is sent to the state each month and the state comptroller divides the amount up as follows: 6.25% automatically belongs to the state for state government use. If local government entities hold an election to do so, the 6.25% sales tax collected can be raised up to an additional 2% for local use. The total sales tax that can be assessed in a particular voting region under state law cannot exceed 8.25%.

More on the various ways that 2% can be allocated will be discussed at a later date, but for now it’s all about how we are currently allocating that additional 2%.

In 1970, the city of Coleman held an election that approved charging an additional 1% in sales tax on locally sold goods to benefit the city’s budget. At that point, the sales tax rate was 7.25%. That left 1% available for eligible entities to assess if elections were held to get voter approval to do so. In 1989, the local Coleman Development Company, Inc. (CDC), under the guidance of a board peopled by some of Coleman’s finest, asked for a city election to fund a 4A economic development corporation (Coleman EDC) with sales tax money. To make it more palatable for the voter to vote “yes” for this additional sales tax, the CDC took the state government’s advice to towns wanting to implement this newly legislated type of local economic development corporation. That advice was to ask only for x% of the sales tax available to you and include a ballot measure to provide property tax relief with the remaining x%. The 1989 city of Coleman ballot asked for .5% of the 1% sales tax available to organize the new 4A EDC. The remaining .5% of the available 1% would provide property tax relief. It was a wash. Both were approved and, as of 1990, we paid, and still pay, the maximum sales tax allowed—8.25%.

The 4A economic development corporation (CEDC) began operating in Coleman in 1990 under the close supervision of the Coleman Development Company (CDC) board. The CDC was well represented on the 4A EDC board and still is. Former State Representative Bob Turner was hired by the 4A/CDC to be its executive director (officially the ED of the CDC). The money received from the one-half of 1% sales tax revenue was commingled with the CDC monies it already had in the bank from the purchase of “stakes” in the CDC by well-meaning Coleman citizens. These “stakeholders” wanted to contribute to the CDC to support the CDC’s efforts to provide industrial development and jobs for Coleman, hence the creation of the Industrial Park at the airport. The revenue from the remaining one-half of 1% was applied by the tax appraiser to reduce our property tax each year.

The impropriety of commingling tax dollars with private funds was brought to the CDC/4A’s attention by 4A board member Billie Mercer in the late 1990s, or maybe it was the early 2000s. At that point, the CDC arranged to open separate 4A EDC accounts with money it identified as “sales tax revenue” commingled in its private funds to deposit in discrete 4A account(s). The late Ms. Mercer was unceremoniously removed from the 4A board as quickly as possible.

I arrived in Coleman in 2003. My interest in how our tax dollars were being raised and spent was stirred by the dismay I felt when seeing the overall deterioration of Coleman neighborhoods and a lackluster downtown. My beautiful childhood hometown was a mess. Of course, my memories of Coleman were from its heyday in the 1950s when my family kept the road hot coming from San Angelo where we had moved to when I was four. Most of the relatives were still in Coleman though, and Coleman was not just my birth-town but my second home. In 2003, I chose to be a returning retiree, and I made it my business as a tax-paying citizen to find out where our tax dollars were going. For a while the local newspaper printed some of my findings, but bowed out when things got a little too “controversial.”

Where all this is headed is what I will cover in my next Meanderings. How did we end up with two economic development corporations? How is the 4B economic development corporation funded since we arrived at the maximum sales tax rate when we elected the 4A EDC and property tax relief in 1989? What are the functions of each of these economic development corporations? What does any of this have to do with my interest in how our tax dollars are spent?

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