Sunset Valley City Council discusses possible sales tax increase

The city of Sunset Valley's police and public works departments operate out of portable buildings.

The city of Sunset Valley's police and public works departments operate out of portable buildings.

A new sales tax could be in store for residents of the city of Sunset Valley, which is looking for ways to fund construction of a new permanent city hall campus to house its police and public works departments.

At its March 8 meeting, the council discussed budget recommendations from its finance committee for the city facilities project. City Administrator Clay Collins said the committee ended up with two potential recommendations for the council to consider.

“We’ve looked at several different ways to pay for the facilities,” he said, citing the use of reserve funds, a possible new sales tax and borrowing money as examples.

The options

Communities that rely heavily on sales tax generally tend to have larger reserve funds, and some people on the committee were not willing to dip below a six-month reserve, Collins said. Currently, Sunset Valley has about 12 months worth of reserves.

Option A proposed by the finance committee would reduce the city’s reserve to three months and does not involve a bond or new sales tax, but it would require that the council identify about $1 million from another source to close the gap in the budget before the project could begin.

Option B would reduce the reserve to six months, implement a new sales tax, called a crime control district tax, that would bring in about $400,000 per year for five years, and the city would borrow about $2 million in certificates of obligation to be paid back over a seven-year period. The city would aim to hold an election on the sales tax in November 2016 but would not hold an election to issue certificates of obligation.

Sunset Valley City Council Sunset Valley City Council meets on Tuesday evenings at its City Hall building on Jones Road.[/caption]

During the March 8 meeting, council provided direction to the committee to examine several other considerations and then come back to council with more information at a later meeting—including direction to examine how long it would take to replenish reserves for each potential option, work to develop a version of Option A with the sales tax increase, and work to develop a version of Option B that includes the sales tax increase but not certificates of obligation.

The sales tax being proposed would be an increase of one-eighth of a percent and would make Sunset Valley’s sales tax equal to Austin’s in terms of size, Cardona said.

Committee members felt the sales tax and bond should be on the table for this initial discussion because they represent significant revenue sources and would allow voters to have their say, Council Member Marc Bruner said.

“To me, it seems like Option B is a better place to start if for no other reason than it allows residents to weigh in,” Cardona said. “Do you want to see stricter budget cuts and drop us down to a point that we can’t recover even in 10 years? Or do you want to finance it through other options? … We have had residents saying ‘We want to be part of the decision.’”

Cardona said she does not feel comfortable with the city going to a three-month reserve.

Council Members Jeff Burdett and Walter Jenkins said the city facilities project is unprecedented in terms of its size and noted not all residents in Sunset Valley would be willing to support borrowing money.

During the same meeting, council voted unanimously to use a construction manager at risk contracting method for the project. Mayor Rose Cardona said that decision will allow the city attorney and architect to present a more streamlined contract draft to the council for consideration at a future meeting.

The next finance committee meeting is scheduled for March 31, so the council could revisit the facilities project discussion at its April 5 meeting. The council would have to call an election regarding the sales tax by mid-August for it to appear on the November ballot.


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