Corpus Christi Caller Times Caller.com - City Council to consider bond issue

Marketplace \| Services \| Contact Us \| Community \| Arts & Entertainment \| Local Guides

Wednesday, October 13, 1999

City Council to consider bond issue
Proposal may draw from property and sales taxes
By James A. Suydam
Caller-Times

A voter-approved increase of both the property and sales tax is what the City Council likely will be asking for in the 2000 bond issue, the council decided Tuesday.
   After hearing what City Councilman Rex Kinnison described as a grim economic report, the council voted Tuesday to explore offering voters a bond proposal next year that would be funded by increases to the city's sales and property taxes. Council members have said a bond issue is necessary to fund improvements such as seawall repairs and street projects.
   City Finance Director Mary Sullivan on Tuesday presented the council with a financial model outlining the impact that a $100 million, property tax-funded bond issue would have on the city's tax rate. The council has not yet set an amount for the bond issue.
   Sullivan told the council that a $100 million bond issue funded by property taxes alone could force the city to raise property taxes by up to 12.5 cents by 2006.
   If the council were to fund a $100 million bond issue through property taxes only, a full 32 cents of the city's property tax rate would go toward debt service alone by the year 2006. That likely would force future councils to increase the city's property tax rate of 62.3 cents per $100 of valuation just to pay for general fund expenses.
   Compounding the council's concerns about the city's economic future was the news that:

The council may be asked to double the one-eighth cent crime control and prevention district sales tax next year. The city only has the ability to raise the sales tax by a total of three-eighths cents before it reaches the limit allowed by state law. If the city were to double the crime control and prevention district tax, the city could still raise the sales tax rate by another one-fourth of a cent.

Restructuring the city's debt payments for existing debt may force the council to cut up to $4 million from the city's general fund next year.
   Projects in jeopardy
   Neal said he's unsure whether the city should have a bond election unless the city pursues a combined tax effort. Without an increase in the sales tax, Neal speculated that the city could realistically only ask voters to support a $50 million property tax-funded bond program, which would not come close to funding the needed projects.
   "Realistically, if we are not going to want to saddle future councils and taxpayers with unrealistic debt, then we have to be looking at a very minimal property tax-financed bond program," Neal said.
   "We're looking at going out and holding public hearings on a property tax program that may very well be not much of a property tax program," he said. "I'm not sure we want to do that."
   But without a bond election, the city will be faced with a capital improvement program that consists only of improvements to Leopard Street and the raising of the JFK Causeway, funded by a state loan program.
   Kinnison said that if a bond issue isn't passed, no capital projects would be possible for several years.
   In the end, the council voted unanimously to direct city staff to continue studying a combined sales and property tax bond issue. The council directed city staff to plan the election for a date no sooner than August 2000.
   Sales tax funding
   According to state law, the city would have to form an economic development corporation to increase the city's sales tax. An [-cent sales tax increase could support about $40 million worth of projects, according to city staff.
   Items that could be funded by a sales tax increase include:

Street projects related to sports, tourism, convention and park facilities and street projects that would help new or expanded businesses, industry or affordable housing.

Park improvements.

Seawall repairs.

A sports arena.
   The council also voiced approval of holding a series of public hearings - several in each district - to solicit public opinion about what should make the ballot for the 2000 bond election.
   Neal said that any projects proposed should be ready to begin within five years.
   "One of the problems of the '86 bond election is that 13 years later, we haven't finished the projects," Neal said. "If we want to try to regain any kind of reasonable amount of, that word, trust, then we're going to have to . . . narrow this list of projects into something that we can do in a reasonable amount of time."



Staff writer James A. Suydam can be reached at 886-3618 or by e-mail at suydamj@caller.com

| Talk about this story | Next Story | Home |

[ Printer-friendly version ]
[ Subscribe to newspaper ]