One thing was evident during Tuesday night’s special City Council work session: the city will have to cut some things out of its budget in lieu of what officials called a “game-changing” rule from the state comptroller.
Recently, the comptroller proposed a rule that would change the definition of a place of business, and therefore change the designation of tax collection for many businesses. This means that many businesses once receiving sales tax would no longer receive it. While this rule has yet to go into effect, officials believe it is more than likely going to pass sometime in April.
Coppell could possibly lose about $12 million annually from its general fund through the new rule, and officials are preparing for the worst.
“We’ve got to determine a philosophy of how we’re going to approach this,” said Councilman Gary Roden. “It would appear you’ve always got to assume the worst case.”
Traci Leach, deputy city manager, said the city continues to do its due diligence in finding out its largest corporate taxpayers' business models and how it fits into the new definition of a place of business.
“... That will help us create more certainty around what is truly the impact on our budget,” Leach said. “This is a new frontier for all of us. We’re working through a change management plan to help walk our community through what this change is.”
The city already has a few ideas in place to save funds where it can. For instance, Leach said there is a hiring freeze on new positions. In addition, departments are looking at changing their licensing software for employees. The parks department is looking at ways it can cut down on printing and mailing and pushing more things online.
On a larger scale, the council is considering pushing back major projects such as the Belt Line Reconstruction project, which is under design. In addition, projects that are designed should be held back from being contracted for the time being. The council, however, said it was not willing to back out of projects that have already been contracted.
“I don’t think we’re willing at this point to hurt the reputation that we have,” said Mayor Karen Hunt. “We want to honor our contracts.”
The council also said it would not jeopardize public safety to cut costs, keeping the fire and police departments a priority.
In addition to the proposed sales tax rule, the city must navigate the recently passed Senate Bill 2, which requires the city to hold an election if the combined tax rate would result in the average homestead to increase by more than 3.5 percent.
Officials will continue the budget discussion at a future meeting.