HomeMy WebLinkAboutCP 114 - � N-"- r.
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x- - - POLICY PROPOSAL
DATE a FILE NUMBER SUBJECT Policy Supporting Expansion of PAGE_OF 3
State.Sales Tax Base
6/19/84` C.P. 114
PROPOSAL'_:._ _.. _ PROPOSED BY: TY MANAGER'S REVI W
-- - -= Councilman Dwaine' Johnson `
Background
y ,:During the- 1981 Annual Conference of the Texas Municipal League, city offi-
- cials adopted a resolution supporting passage of legislation to establish a �-
-= State-supported City Street-Inprovement Fund ("Pothole Bill"). Justification
for seeking-state funds for maintenance and repair of city streets and
bridges included the following: (a) While over 60$ of all motor vehicle
travel-in-Texas is on city roads and while city residents pay a major share .
of all motor fueltaxes and vehicle registration fees collected by the state,
none of such revenues are remitted back to the cities; and (b) while Texas : ;
_-` cities are spending in excess of $200 million per year on street repairs, a -
backlog of repair needs exceeding $1.5 billion is growing at rates. that ex-
ceed local spending Increases.-,,.
While itmight appear appropriate for cities to receive a portion of the
state's:motor fuels and vehicle licensing revenues,- the Texas Constitution
= - =AArticle VIII; Section-7-a) restricts the use of such revenue for public
school education and highway i.rrprovements.- It was thus determined that the
only remaining logical source for funding the "Pothole Bill" was the state's..
General Revenue Fund
During the 1983 Session of the Texas Legislature, TML's Pothole Bill was in-
troduced as a part of the omnibus highway finance package (SB 287 and HB
632). These corpanion bills, sponsored by Senator Traeger -and Representative
Cain, received broad support including the Texas Good Roads and Public Trans-
portation Association, Associated General Contractors, several hundred city
councils and many local chambers of ca�rmerce.
Under the "Pothole"-proposal, the legislature would appropriate $100 million
r per year to the new "City Street Inprovement Fund." Allocations from the
_ t, Fund would be made on a pro-rata basis to cities and dedicated exclusively
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for street and bridge maintenance and repairs on a 30/70 state/local matching
basis. Since no tax bill was enacted during the 1983 session, the highway/
y pothole finance package was not passed.
` - LEGALITY ED
- FISCAL NOTE
CITY MANAGER'S COMMENTS
PAGE_OF
POLICY PROPOSAL (cont'd)
Current Status
Governor Mark White's call for the current Special Session is limited to
consideration of reforms of primary and secondary public school education; to
provide funding for "State Highway Systems Maintenance," and the enactment of
appropriation and revenue (tax) measures necessary to fund these programs.
In the event these items are finalized and enacted into law, the Governor has
stated he will open the session to other specific issues, such as TML's Pot-
hole Bill.
When TML initially proposed the Pothole Bill for consideration by the 1983
Legislature, it was partly based on the fact that during the previous decade,
each succeeding legislature had begun its deliberations with a sizable Gene-
ral Revenue Fund surplus having been certified by the State Ccnptroller.
Shortly after the 1983 Session convened, the Comptroller notified the Gover-
nor and the Legislature that his previous estimate of a $500 million surplus
had been reduced to only $25 million. The practical effect was that if the
legislature chose to increase state spending for either expanded services or
to fund the Pothole measure, additional taxes would have to be enacted. As
stated previously, the Legislature held the line and did not enact new taxes.
In the current Special Session, the Governor has reccnr ended a $4.8 billion
three-year tax proposal to fund education and highway needs. Should the
ti
legislature enact new taxes from whatever sources to fund these priority
measures, it is unrealistic to assume that state senators and representatives
would later in the session enact additional taxes to fund the Pothole Bill.
A major portion of the revenues to be raised under the Governor's. Tax propo-
sal would be derived from increasing the present 4% state sales tax rate to
5%. In this event, the revenue_presently received by cities under the 1%
local option city sales tax would not be enhanced. Cn the other hand,
if instead of increasing the sales tax rate the legislature acted to repeal
certain present exemptions to the sales tax base, as has been recd nnended by
the leadership of both the House and the Senate, the cities would also
receive proportionately increased revenues. In the absence of knowing to
what extent the sales tax base might be broadened, if in fact this is done,
it is not now possible to calculate the potential benefit to a given city.
Given the present circumstances, it is clear that cities ultimately would be
the beneficiaries of increased sales tax revenues if the sales tax base were
broadened as opposed to increasing the rate.
Policy Proposal
It is reccnu ended that the City Council of the City of Fort Worth does hereby
adopt as policy a position to support legislation to repeal certain present
exemptions to the State Sales and Use Tax as presently advocated by legisla-
tive 'leadership.
CITY OF FORT WORTH
POLICY PROPOSAL (cont'd) PAGE OF I
It is also reccmTended that this policy be ccmrmnicated to the members of the
Texas Legislature at the earliest possible date. .
li
The City Attorney has reviewed this proposal and finds that there are no
known legal impediments.
Fiscal Note
The fiscal inpact would be beneficial to cities.
City Managers Comments
The City Manager supports efforts to repeal certain exemptions to the sales
tax base because if approved by the legislature, it will improve the City's
revenue. -
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Councilman Dwaine
Jo on
CITY OF FORT WORTH