Voters in Montgomery County Emergency Services District 10 passed a proposition by a narrow margin May 10 to increase the sales and use tax by 1 percent to better fund the Magnolia Volunteer Fire Department. Its passage spurred mixed reactions from city officials regarding how the sales tax increase will affect future development projects within the city's extraterritorial jurisdiction in instances of annexation.
There were 2,017 votes, or 50.63 percent, cast in favor of the proposition compared to 1,967 votes, or 49.37 percent, in opposition. The city of Magnolia and the Westwood Magnolia Parkway Improvement District have a sales and use tax capped at the state limit of 8.25 percent and will not experience an increase from the proposition. All other areas within ESD 10 have a sales and use tax of 6.25 percent and will see a rise in those rates to 7.25 percent on Oct. 1 due to the passage of the proposition.
"My job is to look out for the city of Magnolia, and I believe [the sales and use tax increase] was bad for the city," Magnolia Mayor Todd Kana said. "It cripples us as a city for what little area we really want [for future expansion]."
MVFD changes
MVFD Fire Chief Gary Vincent said the 1 percent sales and use tax increase is a step in the right direction for the MVFD and will be put toward hiring more part-time paid firefighter positions in addition to maintaining the current volunteer staff of about 50 people. Projected revenue totals from the new sales and use tax increase will be known in the coming months once assessments are conducted by J.R. Moore, the county's tax assessor, Vincent said. The community can expect to start seeing improvements made within the fire department by Jan. 1, 2015, he said.
"While the community will continue to develop, we hope property values will continue to generate, but it's a long, long way from the current staffing levels to get to nine stations staffed," Vincent said. "I think when you look at the profile of the area, this will certainly help, but is this going to solve every problem in the fire department instantly? I don't think so."
Vincent said the fire department's budget has averaged an annual growth of about 3 percent during the past four years and now totals an estimated $4 million overall funneled from property taxes gathered in ESD 10. About $2 million from the MVFD budget is put toward payroll and related expenses for 55 part-time career firefighter positions. An estimated $4 million was from a one-time loan to build the new station on Buddy Riley Boulevard, he said.
"The state law caps the property tax at 10 cents per 100 valuation, so if you have a $50,000 house you would pay $50 in property tax for fire protection to the ESD," Vincent said.
Call volume increased 42 percent last year, causing the service demand to outstrip response ability, Vincent said. It currently requires every firefighter on duty to respond to one house fire, which leaves no one available for a second call, he said.
"[The fire department is] obviously well-trained, [and] they're very professional in their efforts and anything we can do to improve their ability to provide the services they provide is a benefit to everyone in the city and county," Montgomery County Precinct 2 Commissioner Craig Doyal said.
Doyal said the sales and use tax increase will help lower insurance rates for taxpayers and allow the fire department to provide better services, improving its ISO rating in the coming years as levels are re-evaluated.
Magnolia annexation plans
While Vincent and Doyal said the fire department, the City of Magnolia and ESD 10 will benefit from the sales and use tax increase, Kana sees the new proposition as a threat to future growth within the city's ETJ.
"What happens is it limits our ability to expand in the future because when we annex, we then have to provide utilities and services to those areas, and it's a lot easier to do that when we can calculate revenue from sales tax," Kana said. "Now that it has been reduced by half, it affects our ability to expand to commercial—it just isn't worth it anymore."
Kana said the ESD 10 board members have the ability to relinquish 1 percent of the sales and use tax back to the city as it expands and annexes new territory, only if an agreement is reached in the future. There is no immediate concern to reassess the city's 20-year comprehensive master plan since it was designed to adapt, he said.
Kana said several undisclosed business development projects in the works including one big-name commercial establishment have had to be altered since the passage of the sales and use tax increase. The city has an interest in securing future areas for development as far down FM 1488 toward FM 149 as possible, Kana said.
Vincent said the fire department is willing to meet with city and WMPID officials to discuss the effect of the proposition on future growth.
Sales tax effect
Two cents from the sales and use tax in the Westwood Magnolia Parkway Improvement District—the area near FM 1488 and FM 2978—is split between WMPID and the city of Conroe due to an agreement formed after the district was created in 2005.
Under the new proposition, WMPID board members would need to come to an agreement with Conroe officials regarding whether or not to share the remaining one cent of sales and use tax revenue if any new areas wanted to incorporate into the district, WMPID board president Carl Gerhardt said. The district is expected to receive 50 percent less revenue from future incorporated areas since the other remaining cent will be put toward funding the fire department, Gerhardt said.
Gerhardt said the WMPID board members were planning to carry out a road widening and traffic improvement project on Honea Egypt Road near Home Depot. The project is essentially "killed" for now since the passage of the sales and use tax proposition, Gerhardt said.
"It keeps us from growing as fast I think, that's the main thing," Gerhardt said. "We're still going to do as much as we can with what we have to do in the area, but it just hurts us long term. The same thing happens to us as it does the city—just less money."
