Purpose of Type A Sales Tax Revenue
The Type A Fund is set to expire in 2018 and any continuation of the Type A funds will require a general election. In order to continue without a gap, Corpus Christi must pass a Type A economic sales tax proposition to coincide with the expiration of the Type A sales tax on April 3, 2018.
The Type A sales tax must be approved in a regularly scheduled election. It expires in April 2018. The closest regularly scheduled election prior to that date is November 8, 2016.
By statute, Type A sales tax is primarily intended for manufacturing and industrial development. There are three documents that govern the use of Type A sales tax revenue: Section 504 of the Texas Local Government Code, the original ballot language of the proposition of the Type A sales tax, and the Type A Guidelines adopted by the Type A Board and approved by the City Council. There is another useful document called the Economic Development Handbook 2008 from the Texas Attorney General’s Office. It has many examples of what are approved uses of the economic development tax.
There are 216 cities in Texas that currently have a Type A sales tax. Corpus Christi competes against all of these for various projects. This tax is a competitive advantage in attracting and keeping companies in the City.
Section 504 of the Texas Local Government Code
The statute states that Type A revenue may be used to fund land, buildings, equipment, facilities expenditures, targeted infrastructure and improvements for projects including:
- manufacturing and industrial facilities, recycling facilities, distribution centers, and small warehouse facilities;
- research and development facilities, regional or national corporate headquarters facilities, primary job training facilities operated by higher education institutions, job training classes, telephone call centers and career centers not located within a junior college taxing district;
- certain infrastructure improvements that promote or develop new or expanded business enterprises;
- aviation facilities;
- commuter rail, light rail or commuter bus operations;
- port related facilities, rail ports, rail switching facilities, marine ports, inland ports; and
- maintenance and operating costs associated with projects.
The statute allows Type A sales tax funds to be used for Type B purposes if they are approved by the voters. The portion of the tax that supports Whataburger Field and affordable housing are Type B uses which were approved during the November 5, 2002 election.
Sales Tax Summary
Sales tax in Corpus Christi is currently 8.25%. It is made up of:
- State’s portion: 6.250%
- City’s portion: 1.000% (this is capped by statute at 1%)
- Regional Transit Authority (RTA): 0.500%
- Crime Control District 0.125% (voted for on 04/14/07 for 10 years)
Type A sales tax:
- Seawall improvements: 0.125% (voted for on 11/07/00 for 25 years)
- Arena Facility: 0.125% (voted for on 11/07/00 for 25 years)
- Economic Development/Whataburger Field: 0.125% (voted for on 11/05/02 for 15 years)
The ballot language states that the Type A revenue may be used for:
New and Expanded Business Enterprises
Funds will be used for the promotion and development of new and expanded business enterprises at the rate of one-eighth of one percent to be imposed for 15 years.
Funds approved for the promotion and development of new and expanded business enterprises will be used only for the following Projects and no others:
These funds will be used to make grants to companies and organizations to provide training, retraining, and education to insure the knowledge and skills required for the jobs of the future are in place.
These funds will be used to develop programs and facilities that assist small and start-up companies that have the ability to produce jobs for the future.
These funds will be used to assist companies in the creation of meaningful, wealth producing jobs (jobs that bring in dollars from outside the community) in Corpus Christi. Funds would be available to both existing and new companies.
Authorizing the use of a portion of the sales and use tax for the construction, operation and maintenance of a minor league baseball stadium.
Authorizing the use of a portion of the sales and use tax for affordable housing, up to $500,000 annually.