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How to Impose the Tax and Call an Election
City voters must approve of this special, dedicated tax at an election held for that purpose. The election may be initiated:
- at the discretion of the city council; or
- by a petition signed by at least 20 percent of the number of voters who cast ballots in the most recent regular municipal election.
The city council must adopt an ordinance calling for the election at least 62 days before the election is held.
Ballot Language for the Economic Development Sales Tax
Under Type A
Following is ballot language specified for Type A corporations under the Development Corporation Act:
- For a city to adopt, increase or reduce the tax, the ballot must state: "The adoption of a sales and use tax for the promotion and development of new and expanded business enterprises at the rate of ______ of one percent. (Insert one-eighth, one-fourth, three-eighths or one-half as appropriate for the proposed tax rate.)" [Local Government Code, Chapter 504.256]
- A city may also allow a vote on a ballot proposition limiting the length of time a sales and use tax may be imposed. The following language should be added to #1: "to be imposed for _______ years." [Local Government Code, Chapter 504.257]
- A city may also indicate a specific project on the ballot to be funded with the sales tax revenue. In this case, a description of the project is substituted in #1 in place of the following ballot language: "new and expanded business enterprises." [Local Government Code, Chapter 504.260]
- For a city to dissolve the Type A corporation, the ballot should state: "Termination of the _______ (name of development corporation)." [Local Government Code, Chapter 504.352
Under Type B
Except for specific projects such as water supply facilities, water conservation programs and cleanup of contaminated property, the Development Corporation Act does not provide specific ballot language for Type B. City officials should consult with their city attorneys when drafting the ballot language under this section.
Disclaimer
This information should not be construed as, and is not a substitute for, legal advice.
Cities are urged to consult the Attorney General's Economic Development Handbook and their own legal counsel for any questions or interpretations of economic development laws.