Council is hoping to come back with the information requested by ESD 4 by the end of October after failing to provide information requested by ESD 4 in negotiations regarding sales taxes.
Long story short
As the city expands landwise, it annexes parts of the surrounding ETJ, according to McKenzi Hicks, interim director of planning for the city. If the city annexes a part of the ETJ, that section of the ETJ becomes part of the city, and it pays property taxes to the city and receives services from the city.
Elections that took place in 2015 and 2021 authorize the ESD to collect a portion of the sales tax from areas of the ETJ. Sales tax dollars from these areas currently continue to be directed to the ESD after annexation, not the city, Hicks said.
Hicks said because of how sales taxes shake out currently in annexed portions of the ETJ, the city is “operating at a typical loss.”
The city is looking to come to an agreement with the ESD to share the sales tax revenue in annexed portions of the ETJ moving forward, according to Hicks.
What they’re saying
“It’s in their best interest to share the sales tax with us,” said Katie Amsler, director of community engagement and communications for the city.
Amsler explained the city has the power to reject new developments that want to come to the annexed areas, which would result in the ESD receiving no sales tax from those areas.
“We can’t afford to service them without a portion of the sales tax,” Amsler said. “So, that’s why we would have to say no, because we would not be able to service them.”
A representative of the ESD said the voter-approved sales tax allocations it receives are needed to fund things like fire stations as emergency needs in the city and surrounding areas grow.
The ESD would not have been able to keep up with population growth and the needs of the area without the sales tax revenue, the representative said.
