Elections

Motorists drive past signs in 2015 for and against the proposed sales tax increase for League City residents.

STUART VILLANUEVA/The Daily News file

LEAGUE CITY

League City has the lowest sales tax rate in Galveston County at 8 percent, hurting its odds of attracting big companies with good jobs, one group said.

Some business leaders are calling for a quarter-cent sales tax to pay for economic development projects, something surrounding cities have been doing for years as they grab for new employers.

A League City Regional Chamber of Commerce task force that has met for a year suggested earlier this month that the city government would benefit from such a tax to lure desirable corporations to the area.

But League City voters have turned down previous attempts at the extra sales tax. The measure failed in elections in 1994, 1997, 2007 and 2015.

VOTERS SAID NO

The Texas Legislature authorized cities to levy certain optional sales taxes to promote economic development and improve the quality of life. Cities can charge quarter-cent taxes.

In League City, those includes its existing 4B corporation that voters approved in 1994 to promote and develop amateur sports facilities.

What League City doesn’t have is a new, local option sales tax that would be used only to promote and invest in economic development projects.

If League City voters approved such an option, the city could create a more robust economic development program and get a financial return on that investment, Economic Development Director Scott Livingston said.

But 53 percent of voters in 2015 said no.

Revenues from the increased sales tax would have helped lower the burden on residential taxpayers, proponents at the time said.

Had the proposition passed, nonresidents who shop in League City would have played a part in helping pay for economic development projects and economic growth, supporters had argued.

In 2007, 57.6 percent of voters rejected the quarter-cent tax. In 1997, 62 percent of voters opposed it. And in 1994, 59 percent of voters said no to the tax.

The city could invest the sales tax revenue in a wide variety of projects from creating high-paying jobs to supporting city services and infrastructure, proponents argue.

NEEDS AND DESIRES

The money could be used for providing places to live, work, shop, eat and play, Livingston said. The potential projects could stimulate entrepreneurship, innovation, research and development and education, he said.

The city council, the economic development board of directors, city officials and residents would have input and control over the investment of the sales tax revenue, Livingston said.

Using a quarter-cent sales tax for economic development projects could be a smart move, League City Mayor Pat Hallisey said.

“We have some major projects, and we have to figure out how to pay for them,” Hallisey said.

A sales tax proposal failed in 2015 in part because Mark Rohr, who was city manager at the time, didn’t explain it well to people, Hallisey said.

Tom Linklater, chairman of the chamber’s economic development committee, is a staunch supporter of the concept.

“It’s vital to League City’s growth and development in the future,” Linklater said. “Not having it puts us at a disadvantage when competing with other cities.”

INVESTING IN WORDS

League City is not just the only city in Galveston County that doesn’t charge the quarter-cent sales tax, it’s the only one in the area, Linklater said.

But as much as he and others want the tax, voters would still get the final say. Convincing them to support something they’ve been against since at least 1993 is going to take work.

“It’s a misunderstanding,” Linklater said. “We have to do a better job explaining how it works and what it does.”

One key strategy the task force plans to employ is changing the vocabulary. The task force is stressing the word investment over incentive, and it is suggesting that the city stop using the word incentive when talking about attracting businesses.

The one-quarter cent sales tax funds spent on economic development perks, likewise, would be called investments, Linklater said.

“Everything has to have a return,” he said.

Even though League City voters turned down the one-quarter cent sales tax at least four times, many of them have no problem paying the same sales tax when they shop or dine in other places.

“They pay it whenever they go outside League City,” Linklater said. “When they go to Webster or Kemah, they pay for their economic development.”

Sometime they may inadvertently be paying the extra quarter-cent tax in League City, business owner Ronnie Richards said.

“Many times, local businesses are already unknowingly charging 8.25 percent sales tax already, I’ve found,” Richards said.

Richards, who owns Butler’s Courtyard, 122 N. Michigan Ave., found another League City company was charging him the higher rate.

“Unfortunately, this didn’t help League City, and the state kept the overpayment,” Richards said.

Valerie Wells: 409-683-5246; valerie.wells@galvnews.com

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(6) comments

PD Hyatt

Tax, tax and more tax.... When will it ever be enough for our governments.... I have never seen a tax that goes away and most of them seem to grow over time as the tax monster seems to get hungrier and hungrier as time goes by....

Marc Edelman

If I thought that this new tax would somehow be used not used as corporate welfare,I might further consider what the virtues of a new tax might be. However, without really bad track record, such as the botched job that what we did at Cabela's by basically paying 25 million dollars in sales tax rebates over 20 years to pay for their building in League City. What other businesses besides Cabela's and Big League Dreams have had their most costly asset paid for by the city. We also have a dismal record of using incentives to lure new businesses to League City without considering the impact on current businesses in League City is abysmal. If you attract one business to League City at the expense of another, that is not economic development.

Gary Miller

Marc! I share your thoughts that higher taxes would attract more business. I suspect the tax and spend Leaders ? are running out of other peoples money to spend. Higher taxes are a drag on economic growth except the growth of bank accounts of the tax and spenders asking for higher taxes.

Gary Miller

The lowest tax rate in Galveston County and the fastest growing city in Galveston County. Cut taxes to grow, raise taxes to slow.

Chuck DiFalco

Mr. Hallisey, you are out of touch with the League City citizens on this issue. With so many of these tax increase ballots failing over the years, did it ever occur to you that the citizens are tired of being nickeled and dimed? Your salesmanship is most everyone else's spin. And I was never a big Rohr fan, but blaming him for not putting lipstick on a pig nice enough redirects the blame from you for being in favor of the tax increase in the first place. So you've compounded your mistake.

Chuck DiFalco

Mr. Linklater, you and the League City Chamber of Commerce clearly have thrown your lot in with the big government types. More tax money to do what the government thinks is best for everyone, spun as "investment". Everyone pays for the benefit of the few. How nice. Economic development falls outside the basics of city government, which include only roads, water, and drainage as far as capital costs go. Impact fees on new property development should pay for whatever part of those basics that are lacking that existing property taxes don't pay for. No sales taxes for pet projects by quasi-government entities run by insiders!

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