Liberty Hill will receive a 1.35% sales tax on transactions in annexed areas, and ESD 4 will receive a .4% sales tax on those transactions, according to an interlocal agreement provided by Christian Kurtz, director of economic development for Liberty Hill.
Dig deeper
Liberty Hill and ESD 4 have overlapping boundaries and jurisdictions, according to the agreement. The city is located entirely within the ESD.
The city imposes a 1.75% sales tax within its limits, which is the same as the sales tax the ESD imposes in its jurisdiction, excluding areas included in the city limits, according to the agreement.
Texas Tax Code mandates that if the city annexes adjacent territory and extends municipal services to the annexed area, the sales taxes in that area would still be allocated to the ESD, according to the agreement.
Both the ESD and the city determined it was in the best interest of all involved to come to an agreement on how to share the tax dollars.
The agreement went into effect on Feb. 24.
What they’re saying
“It’s in their best interest to share the sales tax with us,” Katie Amsler, director of community engagement and communications for the city, said in October.
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.”
