KFYO Guest Op-Ed: Why the City of Lubbock Doesn’t Need the Lubbock Economic Development Alliance

This KFYO.com guest op-ed is from Mikel Ward

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During the recent budget work sessions, there was little discussion about Market Lubbock Inc. and Lubbock Economic Development Alliance (LEDA).  Because of my involvement and study of the economic development issue for over 20 years, I thought a brief history of City funding and 6 sales tax elections might be helpful before budgetary decisions are made, particularly if you haven’t followed these elections closely.

Until 1987, the Texas Constitution Article 3 Section 52 prohibited any public money to be given to private businesses except for construction or maintenance.  An innocuous sounding Constitutional amendment passed on November 3, 1987 to allow cities and counties to promote economic development led to state law Article 5190.6.  This statute details rules for 1/2 cent sales tax elections, including Sec. A and B for different purposes and allows voters to use this tax for property tax reduction.

Our taxpayer group, SPARTAN studied the statute and was told by a Comptroller employee (who thought I worked for the City) how to promote and pass it before opposition formed.  We led the effort to stop and/or minimize open undesignated funding and to capture three quarters (3/8 cent) of the half cent available for tax reduction in 1995 and 2003. We expect this 3/8 cent tax to generate about $13.6 million (after adjustments) in 2012-13 which will lower our property tax by about 11.07 cents.  This savings seems to be a good trade off to boost economic vitality.

Following are the dates and results for the 6 elections held and brief comments on each:

1-18-1992

Proposition 1 was for 3/8 cent sales tax for economic development and 1/8 cent for property tax reduction.

Voters rejected this by 57.5%.

Proposition 2 was to repeal Chapter 3 in the Charter pertaining to the Board of City Development  (established in 1925) and all provisions, including appropriations of 1/2 mill on $1.00 (which was 3 cents property tax).  Voters overwhelmingly supported this defunding by 83.7%.  Despite this huge margin, the City Council ignored the voters’ will and continued to designate 3 cents for economic development in the  1992-93 The budget where it has continued to be set aside for the last 20 years, even with protests annually.  Market Lubbock Inc. was set up by the Council in 1995 to use this money without voter approval.

1-16-1993

Proposition to use the whole ½ cent tax to fund a Defense Department Accounting Center the City was bidding on. While odds were long and requests for ballot language to automatically repeal if we lost the bid were denied, SPARTAN did not oppose the initiative.  It passed by 82.7%.

8-14-1993

Proposition to repeal the DOD sales tax passed in January.  Petitions were drawn up by the City, but some of the Council and many others actively campaigned to keep the tax and rules were changed midway. About 12,000 signatures were required to put it on the ballot.  Over 14,000 were turned in and all but about 2000 were collected by our volunteers.  Voters repealed the tax by 80.7%.

1-21-1995

Proposition 1 was to fund a multi-purpose arena across from the Civic Center on 6th Street with 3/8 cent sales tax.  Many of us questioned the economic development value of this arena and felt Texas Tech should build one with some private funds from sponsors.  The election was combined with an LISD bond election and early voting boxes were taken to high school and Tech basketball games to get more pro votes.  Despite a massive push to pass it, voters turned it down and voted against by 51%. Proposition 2 was for 1/8 cent sales tax to lower property taxes.  Voters were willing to accept this trade and this part passed by 57%.

1-17-1998

This Proposition was for a 3/8 cent sales tax for economic development.  The campaign to pass it was led by two accountants and much more was spent on the pro side than was raised.  The Chamber of Commerce donated  $82,582.98 from the Lubbock Industrial Foundation account after the election to pay the remaining promotion bills. Even though SPARTAN was outspent many times over as usual, voters rejected this initiative by 63%.

11-4-2003

This Proposition was for a 2/8 cent for property tax reduction and 1/8 cent for economic development.  We reached an agreement with Mayor Marc McDougal and acting City Manager Tommy Gonzales to support this compromise before the plan was announced because taxpayers would receive 2/3 of the remaining amount available.

Voters agreed and passed it by 61%.

Hopefully this historical perspective (which was not so brief after all) helps to show that Lubbock taxpayers have consistently voted against their money being spent for giveaways to selected businesses.  Often similar businesses are forced to subsidize their competitors and many times lose their employees to them as well.  Nearly all of us oppose unfair crony capitalism handouts in Washington, but some think it’s acceptable locally, especially if they benefit from them. We know that many argue that “everybody else is doing this and competition is stiff”.

I continue to think low taxes and minimal roadblocks create a business atmosphere where we all can thrive and prosper without bribery and extortion being required for economic development.  At the very least, the City needs to redirect the 3 cents property tax (which will be $3.6 million in 2012-13) toward debt reduction or other more urgent needs such as maintenance and repairs on various facilities.

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Mikel Ward

Mikel is a long-time taxpayer advocate, former Mayoral candidate and retired small business owner.

She has championed conservative issues and candidates for many years. Mikel presents the facts on wasteful government spending and continues to bring attention to many issues that some wish to keep in the dark.

KFYO and KFYO.com will on occasion present Op-ed articles from Mikel Ward.