San Marcos Mercury | Local News from San Marcos and Hays County, Texas

March 30th, 2008
County faces tight budget squeeze for capital projects

By BILL PETERSON
Editor at Large

SAN MARCOS – The Hays County commissioners laid more groundwork towards road work at last Tuesday’s meeting, formalizing its requests for information from component jurisdictions, finalizing its charge for a bond committee and taking a preliminary look at financing options.

While commissioners plan to ask voters for a bond to support road improvements in November, the chance exists that they will attempt to improve more than just those roads for which the state has promised a $133.2 million reimbursement. The commissioners finished a letter to municipalities and school districts, asking them if they wish for any other specific roads. County Judge Liz Sumter said she would get the letter out before the end of the week.

The commissioners also set up the following the following charge for its bond committee: 1. Review the history of county road bonds and pass-through financing; 2. Review roads requests from school districts and municipalities; 3. Hold hearings about road projects on behalf of the county; and 4. Structure a bond package to put before voters.

The structure could either be tricky or simple, depending on how many roads are included and what kinds of financing options are chosen. Further muddying the waters is the presence of other big-ticket items near and dear to the commissioners court, combined with a desire to keep the property tax rate at 50 cents per $100 of taxable value or lower.

One additional financing option for roads, to give an example, is a Tax Reinvestment Zone (TRZ), similar to mechanisms used in Buda and Kyle to finance road and development projects. Basically, the county would designate land around a possible road, collect its present day taxes for the general fund, then use the incremental gains as the property value increases to pay for the roads within the zone. Public-private financing options also remain in play.

It would be up to the bond committee and the commissioners to decide which roads are included in a bond package, and what roads, if any, might be financed by a TRZ or public-private partnership. At the same time, they will try to keep the package from being too confusing for voters, lest they risk losing a November bond election over technicalities that opponents could easily distort.

“If you’re trying to pitch an election, it’s hard to throw all those alternatives in there,” said Hays County Precinct 3 Commissioner Will Conley (R-San Marcos).

On top of road projects, the commissioners also want to somehow build a new government center and an addition to the county jail. Dan Wegmiller, the county’s bond advisor, told commissioners they might want to consider a pain threshold beyond which they would not want to tax. The county presently taxes 46 cents and Precinct 2 Commissioner Jeff Barton suggested 50 cents as a pain threshold.

Assuming some road expenses, $40 million for a jail addition and $50 million for a government center, then assuming tax base growth of eight percent in each of the next two years and five percent a year after that, Wegmiller said the county could be looking at a tax rate of 49.5 cents.

Considering that property valuations in Hays County actually have grown faster than the 5-8 percent range in recent years, the commissioners might still pay for all their wishes without eventually taxing higher than 50 cents. But it figures to be a very tight squeeze even under prosperous circumstances.

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