Officials from Travis County Emergency Services District No. 2 and the city of Pflugerville are engaged in a contentious debate over which entity deserves the right to collect new local sales taxes from one of their last available sources—the unincorporated areas of northern Travis County.

On Feb. 13, the ESD No. 2 board of directors called a May 10 election to ask voters to allow the district to collect 0.5 percent in local sales taxes from select areas of the district. ESD No. 2—commonly referred to as the Pflugerville Fire Department—provides fire and first-responder services to the city of Pflugerville and its unincorporated areas, Wells Branch, and portions of unincorporated Austin, Hutto, Manor, Round Rock and Taylor.

The state of Texas allows local entities to collect up to 2 percent in local sales taxes—a rate that already exists in Pflugerville and Wells Branch. Therefore, the election will only affect residents in the unincorporated areas of the district where sales tax rates range from 0.5 percent to 1.5 percent. Pflugerville officials, however, would like to reserve the taxing capacity of some of those areas in case the city ever wishes to annex them.

ESD No. 2 officials argue that instead of waiting for when, or if, Pflugerville decides to annex the areas, the fire department should be able to collect and use the revenue for its current needs.

"The law says we can carve out areas [of the district] from the election," said John Carlton, attorney for ESD No. 2. "Our sales tax consultant has told us [the unincorporated areas] could generate $500,000 annually for the district."

ESD No. 2 Fire Chief Ron Moellenberg said the new funding would help shore up gaps in the department's response capabilities. Moellenberg said the rapid population growth of the Pflugerville area—as well as the 10 cents per $100 of valuation cap on property taxes the district is allowed to collect—is straining the fire department beyond its financial and logistical capabilities.

"The problems are not going to go away—they are only going to become more pronounced," he said. "Our rate of service demand is increasing at a much higher rate than the tax revenue."

Among the top concerns for Moellenberg is the district's emergency medical response system. Currently, Travis County contracts out two ambulances from the city of Austin to be stationed in ESD No. 2. According to ESD data, however, those ambulances are responding to emergencies outside of the district approximately 50 percent of the time. Moellenberg is proposing using the added sales tax revenue to develop a full-time staff of paramedics solely devoted to serving ESD No. 2.

Officials with the city of Pflugerville and the Pflugerville Community Development Corp., however, are speaking out strongly against the proposed sales tax increase. According to PCDC Executive Director Floyd Akers, the fire department would be taking away future revenue that could be used for economic development if the areas were to be annexed into the city.

Akers argues that all parties would be better served by reserving the sales tax to promote development and in turn increase the property tax base the fire department relies on for the majority of its funding.

"They are going to cut off their nose to spite their face," Akers said. "This new proposal will ensure the stunting of a new commercial retail development east of SH 130 and prevent the fire department from getting the valuable tax base they need to fund their operations."

Carlton, however, said the ESD would be willing to share or transfer the sales tax rights to the PCDC for future economic development projects.

"There is a mechanism for us to share that sales tax, if the situation warrants it, to promote economic development just like the city wants," Carlton said. "But in the interim, before all of that development goes on, let us go ahead and get the revenue that is out there.

"Floyd is acting as though this is an absolute guillotine. That is fabricated and just trying to create fear. What is true is that the ESD would have to be at the table for sharing its share of the tax for economic development."