Partnering for Impact
Sales Tax can Help Cities Drive Transportation Projects
The Comptroller’s office empowers local governments and communities with the information and tools they need to encourage, create and support economic development and jobs for Texans. Look for our special “Partnering for Impact” section each month, featuring timely, important information, news and tips for local governments and economic development corporations.
Funding local transportation infrastructure projects has become a major challenge for Texas cities. Due to rapid population growth and the rising costs of constructionmaterials, right-of-way acquisition and labor, some cities face the difficult choice of reducing public services, increasing taxes or delaying needed transportation improvements.
The sales tax for economic development is a funding option for transportation improvement projects. Authorized by Sections 4A and 4B of the Development Corporation Act of 1979 (the Act), city voters may adopt either a Section 4A or Section 4B sales tax, or one of each, at a rate of up to half of 1 percent, as long as the combined local sales tax rate does not exceed 2 percent.
Blanco County Courthouse
Built in 1916 by architect Henry T. Phelps, the Johnson City Courthouse is the last in a line of three for Blanco County. Two previous courthouses were located in Blanco, according to www.texasescapes.com. James Waterson built the Classic Revival style courthouse at a cost of $28,900. The county seat was moved from Blanco to Johnson City in 1890. For more information, visit Blanco County’s Web site.
Under the Act, economic development corporations (EDC) may fund a number of transportation-related projects: the purchase of equipment, materials, land and other costs necessary to construct or improve streets, roads, rail spurs, commuter rail, light rail or to acquire and operate motorbuses.
The Act permits all existing Section 4B EDCs to fund transportation-related projects as long as the ballot wording authorizing the sales tax did not prohibit such expenditures.
Funding the Roads
Follow these steps to fund a transportation-related project with a Section 4A Economic Development Corporation (EDC):
- the EDC’s board of directors posts a meeting notice and agenda to consider funding the project at least 72 hours in advance of the meeting time;
- the board determines whether the proposed transportation project provides targeted infrastructure to a project permissible under the Act; and
- the board and city council vote to approve funding for the project.
Follow these steps to fund a transportation-related project for a Section 4B EDC:
- the EDC’s board of directors posts a meeting notice and agenda to consider funding the project at least 72 hours in advance of the meeting time;
- the board determines whether the proposed transportation project would promote or develop new or expanded businesses;
- the board and city council vote to approve funding for the project; and
- the board holds at least one public hearing to allow city residents the opportunity to provide input on the merits of the project.
For more information, visit the Comptroller’s Local Government Assistance Web site or call (800) 531-5441, ext. 3-4679.