Lewisville officials say a bill proposed at this past Texas Legislature would have cost the city millions of dollars per year if it had passed.
Now city leaders are preparing in case the bill is more successful at the next session.
House Bill 4072, authored by State Rep. Morgan Meyer, would have changed the state’s rules on how sales tax for different types of transactions is distributed.
Currently sales tax from a sale goes to the city where the item was manufactured or shipped, also known as origin sourcing. But HB 4072 would have changed that to where the sales tax goes to the city where the item is delivered, or destination sourcing.
For Lewisville that would have meant a major loss in sales tax revenue, said James Kunke, community relations and tourism director for the city. Kunke said this bill would have shifted the sales tax from 15 of the city’s 30 top businesses.
Kunke pointed to Norman International Dallas, a window and window treatment supply company located off Interstate 35E in north Lewisville. He said currently the city receives the sales tax generated from online sales. But if the system changed to destination sourcing much of those dollars would go to cities that are booming with new home construction.
“We have a lot of warehouses and suppliers,” Kunke said. “We estimate this would have cost us approximately $10 million a year. That’s one-third of our sales tax and one-10th of our operating budget. That’s huge. That means shutting down buildings, taking police and fire personnel off the streets and raising taxes. And we don’t raise taxes easily.”
Other cities were projected to be impacted even more, as Coppell officials said the bill would cost the city $12 million a year.
Kunke said the bill passed out of the Ways & Means Committee but was left pending in the Calendars Committee and did not go to the House floor. He said an interim study will take place before the next session to determine the impacts of such a bill.
“Nobody did a study on this to see what the impact would be,” Kunke said.
He said Lewisville officials made the case against this bill during the legislative session and will continue to do so.
“We’re going to participate in hearings, we’ll have written testimony. They’re going to hear from us,” Kunke said. “We’re going to talk to our local representatives to make sure they know how this will impact us.”
While HB 4072 did not pass, a new rule issued by the state comptroller will change the system to destination sourcing for online purchases only. That goes into effect in the fall, and Lewisville officials said that is expected to cost the city $1 million a year.
Other key bills
Lewisville officials kept close watch on several bills that did pass and discussed how they will directly or indirectly affect the city. Last week government relations advocates Brandi Bird and Burt Solomons updated the City Council on bills considered to be a high priority for Lewisville.
HB 5 creates a statewide broadband office to map existing broadband service and identify gaps in case the state receives federal funding for broadband expansion. It also sets up a fund outside the treasury.
“There was a lot of discussion among legislators that this is not just a rural issue, that it’s very much an urban issue as well,” Bird said, “and there are gaps in the urban areas that need to be filled.”
SB 1359 requires a municipality to create a mental health leave policy for police officers, including the number of paid leave days that each officer is entitled to, as well as the type of events that would qualify an officer for that type of leave.
Officials also monitored bills that ended up not passing but were still of interest to the city. SB 861 would have allowed for virtual meetings permanently. HB 2683 would have required cities to allow the public to speak remotely if the meeting was held virtually. Neither bill passed, so virtual meetings will not be allowed to continue after the governor’s disaster declaration ends. Lewisville, however, resumed in-person meetings in May.
HB 35, authored by Rep. Valoree Swanson, required that all debt, including refundings, to be voted on in a November election. The bill never received a committee hearing.
Bird said there were several successful bills that won’t impact Lewisville because of its population limit, though she said they’re worth monitoring in case the population bracket changes.
HB 1069, by Rep. Cody Harris, allows first responders to carry a handgun. This bill does not apply to cities with a population under 30,000.
HB 1900, authored by Rep. Craig Goldman, allows the state’s criminal justice department to identify municipalities that decrease police department appropriations year over year, and it establishes restrictions on that municipality. Penalties include a 10-year moratorium on annexations, while holding elections for every annexed area over the last 30 years to give them the option of de-annexing.
Others include requiring the municipality to set its tax rate at the lesser of the no new revenue rate and the voter approval rate for three years. The comptroller can withhold taxes for a year.
HB 1900 applies to cities over 250,000.
“Our fear is that population bracket could be lowered, so we want you to be aware of what this bill does,” Bird said.
Bird said there were several bills that touched on annexation and strategic partnership agreements but none that impact the pending annexation of Castle Hills.