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Amid flurry of propositions, how much burden will taxpayers want to shoulder?

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Posted: Saturday, November 2, 2013 9:53 pm

McALLEN — While voters slowly trickled into the McAllen Public Library on Thursday afternoon, Dean Padavon sat nearby, quietly poring over the newspaper obituaries.

The 84-year-old retiree had already voted — at 9:31 a.m. on Oct. 21, the first day of early voting — against all five local ballot propositions, which would fund additional spending by South Texas College and McAllen with higher property taxes.

“Because of the money issue,” Padavon said, explaining why. “They’re spending a lot of money.”

In low-turnout Hidalgo County, older fiscally conservative voters may have a major impact during the off-year election. And many have started to wonder: Just how much government can Hidalgo County afford?

Last year, Hidalgo County Judge Ramon Garcia personally asked voters to support a 2.5-cent property tax hike for drainage improvements. Voters approved, and Hidalgo County obtained a better-than-expected interest rate, which reduced the tax burden to 2.29 cents per $100 of assessed valuation.

Every cent adds $10 to the annual property tax bill for a $100,000 home.

Now South Texas College wants all Hidalgo County and Starr County voters to approve a 3.5-cent property tax hike for new classroom buildings and expanded operations. McAllen wants residents to approve an additional 4.5-cent tax hike for three big-ticket projects.

Meanwhile, Proposition 8 on the statewide ballot would repeal part of the Texas Constitution, which limits any Hidalgo County hospital district to a 10-cent property tax.

In El Paso County — also located on the U.S.-Mexico border and with a comparable population — the University Medical Center of El Paso hospital district collects a nearly 21.44-cent property tax, which funds a nonprofit hospital and neighborhood clinics affiliated with Texas Tech University. Similarly, the Hidalgo County hospital district may eventually fund a new University of Texas medical school for the Rio Grande Valley.

And, eventually, collect a similar tax.

During the next few years, the McAllen school district may also seek higher property taxes for new construction and campus renovations. And without new revenue or major department restructuring, Hidalgo County may require a tax hike to fund operations — not to mention capital improvements.

“This happened in California. What do you think put California in such a bad financial state of affairs? What happened was they increased your property tax not only in percent, but in value every year,” said Ned Sheats, 70, a retired manager at Panasonic and former Orange County resident who now serves on the Mission Planning and Zoning Commission. “And the people out there finally said 'Forget it, I can’t take it anymore.'”

Several factors, though, make a full-scale taxpayer revolt unlikely on Election Day.

The Hidalgo County Elections Department opened polling locations on four South Texas College campuses, which boosted turnout among students. Nearly 21 percent of the 11,900 people who cast in-person ballots voted at South Texas College campuses.

Additionally, local voter turnout campaigns and political action committees have either been issue-neutral or supported the various ballot propositions.

South Texas College advocates formed the STC 2020 PAC, which promoted both the community college propositions. McAllen boosters created the Invest in McAllen PAC to support the three city propositions.

Aside from concerns about McAllen Proposition 1, which would build a road between two city parks, neither McAllen nor South Texas College encountered organized opposition.

SOUTH TEXAS COLLEGE

South Texas College asked voters for a 3.5-cent property tax increase, which would allow the community college to meet demand ever-growing demand.

A half-cent would allow the community college to borrow nearly $160 million for badly needed capital improvements, including new classrooms and buildings. The remaining 3-cent property tax increase would pay new instructors, buy new equipment and fund other operating costs associated with the new buildings and higher enrollment.

South Texas College’s property tax rate would increase from 15 cents per $100,000 of assessed valuation to 18.5 cents — a 23 percent jump.

Job training is important, Padavon said, putting aside the newspaper obituary page, but he doesn’t support higher taxes for South Texas College.

“That means something’s wrong in the high schools,” Padavon said. “If they corrected that, they wouldn’t need STC, really.”

Not all fiscally conservative voters oppose the South Texas College propositions.

Dual enrollment programs, which allow high school students to earn college credit, make higher education affordable, said Pete Pranis, 70, a retired McAllen resident. For people who aren’t academically inclined, South Texas College provides real-world training. And the community college also offers many people another shot at education.

“And these folks are serious. They’re hard working,” Pranis said. “They might have been screw-ups in high school, but they’ve been out in the real world. They see the light.”

For students, South Texas College’s request for additional funding makes obvious sense.

Julio Rodriguez, 18, said election workers turned him away because he didn’t have photo identification. He planned to try again, hoping the community college would replace portable buildings with actual classrooms.

“They really need a building,” said Rodriguez, a dual-enrollment student. “They can’t be in portables any longer.”

Additional funding would also help expand in-demand programs.

South Texas College doesn’t have enough slots in the highly competitive physical therapy assistant program, said Juan Garza, 40, a U.S. Navy veteran from Alamo. If he doesn’t qualify for one of the 12 slots, Garza said he’ll probably move to Corpus Christi and enroll there.

“It’s a sacrifice I have to make,” Garza said. “I can’t be putting it off.”

A first-time voter, Garza said he supported both South Texas College propositions. Garza voted right down the hall, inside a student lounge that had been converted into an early voting location.

McALLEN

The McAllen ballot includes three stand-alone city propositions.

Together they would allow the City Commission to borrow $45 million for three big-ticket projects: $15 million for road improvements, $15 million for a new city theater and $15 million for sports fields.

McAllen will gradually repay the debt with revenue from higher property taxes. The exact tax hike will depend on market interest rates when McAllen borrows the money.

Mayor Jim Darling estimated the projects would require a 4.5-cent property tax hike, which would add $45 to the annual tax bill for a $100 home. Darling projected the 4.5-cent rate based on 1 percent annual growth in McAllen’s property tax base, a 96 percent tax collection rate and a 4.8 percent interest rate on the $45 million debt.

City financial adviser First Southwest, which used very conservative numbers, estimated a 4.8 percent interest rate on the $45 million debt would require a nearly 5.3-cent property tax increase, according to an Aug. 1 analysis. A higher 5.55 percent interest rate would require McAllen to levy a 5.6-cent property tax hike.

Both First Southwest projections don’t include any growth for McAllen’s property tax base from 2015 to 2033, which isn’t likely. First Southwest also assumed a lower 94 percent property tax collection rate.

Funding roads makes sense, Pranis said, but borrowing money for a city-run theater and new sports fields doesn’t.

“Once you start going down this road, it’s not going to take too long before you’re going to be faced with a hell of a tax bill,” Pranis said. “The folks that I know — who know what’s going on — feel pretty much the same way about the performing arts center. The roads, because it’s a capital improvement, ok, they can buy that.”

Just like borrowing money for a theater, borrowing money for new sports fields isn’t wise, Pranis said, and the proposal brought back memories of the city’s failed sports complex proposal.

“It’s just repackaging the same rotten stuff,” Pranis said. “New wine bottles, same crappy wine.”

HOSPITAL DISTRICT

While state Proposition 8 wouldn’t have any immediate tax impact, voter approval would mark the first step toward a Hidalgo County hospital tax.

Proposition 8 would amend the Texas Constitution, which currently limits any Hidalgo County hospital district tax to 10 cents per $100 of assessed valuation. Texas caps other hospital districts at 75 cents.

“It’s a matter of equality, more than anything else,” said Israel Rocha, government affairs officer for Doctors Hospital at Renaissance.

In Texas, hospital districts fund indigent healthcare, typically through a public hospital system.

Hidalgo County doesn’t currently have a hospital district or a public hospital. If established, the hospital district may partner with the new University of Texas medical school, which would be established during the upcoming merger of the University of Texas-Pan American and the University of Texas at Brownsville.

Many Texas hospital districts levy a property tax above 20 cents per $100 of assessed valuation.

Starr County residents pay a 25.69-cent property tax to the Starr County Memorial Hospital District, said Starr County Chief Appraiser Rosalva Guerra. The tax supports a 49-bed acute care hospital and three rural medical clinics. For a Starr County resident with a $100,000 home, the hospital district adds nearly $257 to the annual property tax bill.

In El Paso County, the hospital district collects a nearly 21.44-cent property tax, which funds the University Medical Center of El Paso. The money partially funds Texas Tech University’s teaching hospital and neighborhood clinics. For an El Paso County resident with a $100,000 home, the hospital district adds $214 to the annual property tax bill.

And Bexar County collects a 27.62-cent property tax for the local University Health System, a partnership with the University of Texas-Health Science Center in San Antonio. For a Bexar County resident with a $100,000 home, the hospital district adds $276 to the annual property tax bill.

Of course, the Rio Grande Valley’s new medical school would boost the local economy, create new jobs and help solve the region’s doctor shortage. Voters would weigh the benefits against any new taxes.

 “But whatever it is, if you have that process, you should have the same rights as everyone else,” Rocha said.

Ultimately, Proposition 8 will fall to Texas voters. Hidalgo County residents, who would benefit from the medical school and pay the hospital district’s taxes, will have little control over the outcome on Election Day.

BIT BY BIT

Eventually, small property tax propositions add up, said Sheats, the Mission Planning and Zoning Commission member.

Rio Grande Valley residents may start rejecting worthy projects, including infrastructure improvements, because they simply can’t afford higher property taxes.

“People are going to get tired of it,” Sheats said. “And they may not get tired of it for the right reason.”

dhendricks@themonitor.com

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