Stafford council wades into property tax discussion

The Fort Bend Star
By Ken Fountain, KFountain@fortbendstar.com
December 31, 2023 

Continuing a discussion they began in November, Stafford City Council members recently held a meeting where they tossed around the idea of instituting a property tax for the first time in nearly three decades.

The issue has long been considered something of a third rail in Stafford politics, as the seven-square-mile city is one of the only municipalities in Texas without a property tax and has long used that as one of its calling cards for attracting new businesses and residents. The late mayor Leonard Scarcella, who died in 2020 after a half-century in office, had put the zero-property tax policy in effect in 1995. The city relies primary on sales taxes, as well as permits and other fees, to generate revenues.

In recent years, however, concerns over the city's budgetary constraints, ailing infrastructure and deferred capital improvement projects have brought the idea of a property tax to the fore, with even some sitting Council members who campaigned last year on a pledge of not instituting such a tax are considering the possibility.

At its December 20 meeting, the council members heard a detailed presentation from Alka Shah, the city's chief financial officer since June 2021, on Stafford's financial position over the past few years. Shah, the city's accountant, repeatedly stressed that she was there only to provide information to the policymakers at the dais, not make a recommendation on what they should do.

While most cities' budget planning cycles have three aspects - operating budgets, capital improvement projects and five-year forecasts, Shah said, Stafford in recent years has been focusing only on the operating budget and does not have the capacity to discuss capital needs or long-term innovation "simply because of a lack of resources."

In the two budgets that the city has put in place since she came on board, between 20 to 25 city jobs have not been budgeted for, Shah said. Most of those positions have been in the police and fire and public works departments.

"The department heads are expected to manage their operations with slim and sometimes nonexistent resources," she said. "Our financial resources and revenues are not adequate and highly volatile in nature. As a result, maintaining a growing and healthy fund balance and implementing a conservative approach for revenue projecting is critical."

The council's recent decision, under new Mayor Ken Mathews, to raise the salaries for the city's police officers and firefighters and other employees in order to make Stafford more competitive with peer cities is appreciated, Shah said, but it was funded by dipping into the city's fund balance, essentially its savings account. "Since these expenses are recurring in nature, I'm not sure how we can fund them again next year," she said.

"We have never paid attention to capital needs of operating departments," Shah said. "Honestly, I'm embarrassed to inform you that items used by various departments, including police, are aged, and some of them are older than15 years."

"Our infrastructure is also crumbling and needs attention," she said.

All of the city's combined needs require a steady and reliable source of revenues, and the "business model" of the zero-property tax policy is not up to the task, Shah said. More and more of the sales tax revenues have been transferred from capital and long-term projects into paying the city's operating expenses, she said.

"We need to change our strategy from being reactive to proactive to be successful," she said.

Shah's presentation was interspersed with a wide-ranging discussion among Council members. Position 6 Council member Tim Wood, elected last May on a platform of not instituting a property tax, seemed to be particularly alarmed by the city's financial picture as outlined by Shah.

"To me, it comes down to what kind of city do we want to have," he said. In order to return the city to financial sustainability and provide the infrastructure and amenities that residents came to expect in the 1990s, Wood said, "we have got to substantially increase our revenues."

Conversely, Position 3 Council member William Bostic, who in November reiterated his firm stance against such a tax, noted that since Mathews and the new council came aboard last year they begun to implement new revenue streams which he said are not yet accounted for.

"This is a problem that's been festering for years," he said. "I understand some things haven't been built, but we're slowly building that backlog. It's going to take time."

Position 2 Council member Virgina Rosas said that no one in the current administration or council is to blame for the city's current predicament. "It's the positive we've come to be in by natural growth that we've experienced," she said. "But it's something that this council and this mayor has to meet head on."

"We don't want to be the council where the city goes bankrupt," Rosas said. "That's the direction we're headed. We're going to go bankrupt if we don't do something."

In the end, the council decided to continue the discussion at a later specially called meeting.