City leaders in Galveston are grappling with a difficult issue — the rising costs of public safety in a tourism-supported economy.
That is not a new problem, and it won’t be easily solved. Progress has been and will be incremental, not easy or quickly attained.
“We tax 50,000, but we serve millions,” City Manager Brian Maxwell has said. Roughly 50,000 people live on the island, but to support tourism, many hundreds of thousands more must receive services.
In Galveston, more than 100 percent of the city’s property tax revenue goes to one expense — public safety. That’s unusual.
City officials have been considering this issue, and a couple of conclusions seem clear. There are no quick fixes. Instead, the city has taken a deliberate course toward raising revenue and controlling the increase in costs.
“Around 63 percent of our budget goes to first-responders, fire, EMS, police and that will probably be going up from year to year,” Mayor Craig Brown has said.
Given the need for manpower on the streets, it’s not likely the raw numbers of personnel will go down. Neither can the city substantially cut the cost of benefits to city employees.
Years ago, the city chose not to join statewide pension plans for public unions. Thus, it must cover the full costs of pension liability for 177 members of the local police pension plan versus sharing costs across hundreds of thousands of state employees.
As Maxwell points out, the city has already made progress in stabilizing the police pension fund, which once was one of the most underfunded in the state, with a very low ratio of assets to long-term liabilities.
Bankruptcy as the result of growing and unrestrained pension costs has occurred coast to coast, from Vallejo, California, to Detroit.
That typically happens in communities and states that have outdated defined benefit plans rather than defined contribution plans. Galveston still has a defined benefit plan, but the risk does not appear imminent in Galveston.
Maxwell said one of the city’s accomplishments in recent years has been to gradually move the police pension plan to a 30-year amortization.
In pension policy, the amortization period is the amount of time required to pay off a retirement system’s unfunded actuarial accrued liabilities, calculated by the retirement system’s actuary based on projected contributions and investment earnings.
Lacking a quick fix, Galveston must continue doing what it has been doing, looking for ways to raise revenue from new sources.
Those new fees will most likely be more non-property-tax revenue bumps, such as long-term parking fees for cruise customers and a proposed cruise ticket tariff.
Unionized public employees are a tradition in Galveston. The city’s police union, in particular, has a long history of aggressive lobbying and political action, including endorsing and supporting candidates for mayor and city council.
That increases the challenge for a city that must control the growth in the numbers of its public safety employees, in what they earn and in long-term benefits such as pensions and health care.
Keeping a tight grip on those costs will be daunting but essential for the city’s future finances.
• Dolph Tillotson
(12) comments
Everyone loves the blue until the blue wants to get paid. The consequences of poorly compensated police are well known. Rookie officers take jobs with low pay, then move on to big cities where they are better paid and get better benefits. Jurisdictions that pay poorly also attract officers that washed out elsewhere, often due to chronic attitude problems.
Mr. Maxwell identified the problem correctly, but I don't know the solution.
Park's Board has plenty of $$, looks like an easy answer to me.
“We tax 50,000, but we serve millions,” City Manager Maxwell seems to have forgotten that tourists pay an enormous amount in the form of hotel occupancy and sales taxes. Not to mention all the jobs supported by the business they bring. If he views North Galveston County residents as a burden, perhaps I should vacation in the Hill Country instead.
We cannot use HOT for the purposes you mention. Happy to hear someone from North County uses our hotels and STR’s!
Most sales tax comes from retail merchandise sales as groceries (which is our biggest tourist buy….especially in STR’s) are primarily not taxable.
We welcome all visitors but want to make sure the visits are safe, clean and pleasant and those items not at the costs or expense or services of/to our full time residents.
Given your brief description, no fee the city is imposing to help cover costs would impact your stay here.
Enjoy and Welcome!
Here’s a thought. Everything doesn’t have to be tourism and large event related. That focus doesn’t come from unions … it comes from you know …. The political lobby groups that weren’t mentioned.
All of our events pay for their own security with minor exception.
“We tax 50,000, but we serve millions.”
I'm not sure I understand this statement. The City does not tax people. It primarily taxes (1) property, (2) sales, and (3) hotel/STR guests. None are tied to or limited by our 50,000 residents. Building continues on the west end, and in vacant lots behind the seawall where available. Most are not homesteads.
Also, the millions of people who visit our island generate sales tax as well as hotel occupancy taxes, while the places where they spend their money and the hotels/motels/STR's where they stay all pay property taxes.
It would be nice to see 5-year trends on each of these revenue components, to better understand this issue.
We can’t spend HOT on public safety. That is the primary tax benefit from visitors to the island. The majority of ad valorem taxes and sales tax comes from those that live here or own property here. Most visitors to the island are still day trippers and the big beneficiary of them is Buccees or grocery stores where much is non-taxable food items. Those that stay here benefit us more by dining out and visiting more attractions.
Regardless public safety cost consume all of our advalorem and 1/3 to a 1/2 of our sales tax no matter where it comes from. That is unlike most any other city of our size. That leaves very little left for our residents (the 50,000) for services and amenities. It is also somewhat perilous as sales tax is far more volatile than advalorem and it is now committed to a true need that happens rain or shine. We have a need a police force twice the size of cities our size. Because of our industrialized areas plus our huge influx of visitors we have a need for a full time fire department of 110 fire fighters. Due to 7,000,000+ visitors a year our infrastructure has to sustain and is worn at a faster pace than cities of our size.
So yes…..we ask our 50,000 residents to bear the burden (be it tax or service limitations) to help serve our visitors. A good problem to have. Visitors are an important part of our economy, our jobs, and our lives. We wouldn’t have the stores, restaurants and other amenities in a city of 50,000 without them. The trick becomes having those that visit our island pay the incremental costs of them being here and the cost of the developments here for their benefit. Also use those funds to help reduce costs for our residents and property owners.
The trends are all in our budget. They always have been. It’s online. Probably one of the ONLY taxing entities on the island that offers that level of transparency. We not only show history going back several years, we actually do financial forecasting and show administrative overhead to operate the city. All available to the public on the city web site. You should check it out.
We live in a city where routine street maintenance and services are better than some past decades but still deficient. This along with high costs and crime have pushed many to move off island.
Explore if HOT through an inter-local or HOT application can pay for the extra services needed for police and fire due to tourism. If it’s a definite no …. It should be on the city’s legislative agenda every year until the law changes. Ensure that any changes don’t impact payment into police and fire pension benefits.
These extra personnel costs wouldn’t then come out of the city’s general fund but from the HOT creating the need of all the extra personnel and services.
In recent votes, the city is charging mostly one segment in the ticket realm… the public port. But not charging anyone else on tickets? Fair? Not? I didn’t hear any discussion on that? The port which is owned by the city doesn’t get any HOT. Why not?
Make the port get a MANAGEMENT audit before the bonds, and then give some HOT to the public port that you own.
Transparency and grading from a regular public person that actually seeks open records and reads public budgets and ACFRs.
City - A+ on open records and meetings and Annual Comprehensive Financial Report (ACFR). Since the port and PB roll up into the city ACFR, the city should be mandating internal management type audits. Since the city TRIES to audit both board’s r3venues and keeps getting blocked, the grade is an undetermined at this time.
Port - F on open records and meetings. A+ on ACFR format, F on content as I believe that the report was significantly inaccurate because it didn't report FEMA liabilities.
Park Board - A on providing records, F on posting all meetings and only voting on posted items, F on ACFR as it does not perform an ACFR. No clue on whether budget and component audits are accurate as the budget is hard to follow and funding appears to mix.
It seems to me that much of this discussion exemplifies the problem: focus on tourism as if it is the only source of revenue while ignoring the island's potential to expand other job creating industries. Tourism and the unmentioned port employment are chugging along fine. But what is the City doing to attract other industry? Do we have an organized and competent effort to attract manufacturing or other service industries? Does the City have a plan for incentives to entice non-tourism or shipping business to Galveston? If you think we do, then ask yourselves whether they are "effective". That would separate opinion from fact. I do not see much happening that would raise wages and therefore increase tax revenues, aside from tourism and shipping.
Remember that you must budget public safety for Peak island population, when the majority of tourists are here for events like Dickens, Bike Week, Mardi Gras, and simply Summer beach tourists. As a result, your Public Safety staffing may be a little higher than you'd normally need on a weekday in January. But hiring Permanent Part Time is not really possible. Officers want full-time assignments and the benefits that come with that. This City wants high quality officers grounded in the region (e.g. residing here). You can sometimes hire additional officers to work part time jobs from other agencies, but availability is not always reliable as their populations increase during the same time period, and it can get very expensive. Hence the conundrum.
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