The Texas Comptroller’s Office implemented a rules change in October 2022 that altered the way sales tax is allocated for online purchases. The new rule treats online purchases differently from all other purchases by collecting sales tax based on the location of the buyer (destination-based) rather than the location of the sale (source-based). We believe this rules change should be reversed, and strongly oppose any attempt to apply this sourcing change to other retail transactions.

A change to destination sourcing would cost too much and produce little, if any, benefit. It places a large burden on businesses - especially small businesses - that ship, mail, or deliver to customers in multiple parts of Texas. They will have to obtain expensive new software, or hire professional help, to track the sales tax rates of more than 1,400 taxing entities. This will be particularly burdensome for businesses that provide services at a customer’s location, such as pest control and landscaping. More than 20,000 new addresses are added in Texas every month that the Comptroller and small businesses statewide will have to track for destination sourcing.

We further believe that valid economic development agreements that were in effect prior to January 1, 2020, when the Comptroller’s rules change was first proposed, should be allowed to remain in place throughout their existing terms and that sales tax on relevant online purchases should continue to be source-based throughout that term.

Lewisville has one such agreement. We entered a 20-year agreement with Bed Beth & Beyond in 2017 that includes a scaled sales tax sharing for 20 years. This arrangement, which is fully compliant with Texas law, helped Lewisville bring the company’s fulfillment center to Texas rather than other mid-American venues such as Oklahoma City and Kansas City. If sales from that facility change from source-based sales tax to destination-based sales tax, it will deprive Lewisville of about $1 million in annual revenue, forcing the city to either increase other taxes or reduce services to residents. This contract was drafted in good faith under Texas law, and it should be allowed to run its term along with similar agreements in other Texas cities.

The mass May 24, 2022, shooting at Robb Elementary School in Uvalde left 19 children and two teachers dead. It also raised concerns statewide from parents who send their children to public schools and expect their children to be protected from harm.

Lewisville has worked with the Lewisville Independent School District on measures to enhance safety at local school campuses. This includes police officers assigned to every public school campus in Lewisville. But the costs for effective school safety measures can quickly exceed local resources, forcing tax increases or limiting the effectiveness of those measures. For example, limited financial and personnel resources in Lewisville mean that multiple elementary schools are assigned a single officer who rotates patrols among the campuses.

We call upon the Legislature to provide increased and stable state funding sources for those measures related to campus security and student safety.

Rapid population growth, limited housing stock, high construction costs, and inflationary pressures have combined to make affordable housing a serious challenge for many Texas families. Nationally, 49 percent of Americans say affordable housing is a major problem in their local community. Lewisville City Council has heard from a growing group of seniors living on fixed incomes who are struggling, often unsuccessfully, to keep up with rapid rent increases during the past two years. We believe the far-reaching scope of this problem warrants immediate attention from the Legislature.

Lewisville supports comprehensive research by state officials to identify short- and long-term solutions for this statewide problem. Options might include grant and incentive programs to developers of affordable housing, reasonable caps on yearly rent increases for low-income and fixed-income renters, grant programs to assist fixed-income seniors with their housing costs, and applying residential eviction processes to residents in an extended stay hotel property who have received an exemption from Hotel Occupancy Tax under Texas law.

Lewisville agrees with the Texas Police Chiefs Association that the hiring and separation process for police officers statewide must be strengthened. The current system for screening applicants provides too many opportunities for an applicant who is rejected for cause by one agency to continue applying to other agencies. Current law also can make it difficult for an agency to remove an unfit officer and does not provide sufficient barriers to prevent an officer who is terminated for cause from obtaining employment with another agency.

Per the TPCA, “law enforcement personnel who cannot be trusted or who have abused any person must be held to a high accountability standard, which includes possible removal from ever serving as an officer in the future following due process.”

We strongly support the TPCA’s list of recommended reforms to the police officer hiring and separation process, and believe these reforms should be adopted both to protect the public from unfit officers and to protect the law enforcement profession from the damage that is caused when unfit officers take the public spotlight.

We understand that property tax relief is a priority of the 88th Texas Legislature. As the Legislature considers this important issue, we ask that you consider there are certain fixed costs of necessary services, such as police and fire, that make up the majority of municipal budgets. If property tax is reduced or capped, money has to come from other sources to avoid reduction or elimination of vital services that residents expect and deserve.

When similar measures are considered during the coming legislative session, there must be some effort made to balance the impacts of those measures so that they do not inadvertently shift the tax burden to property owners who do not directly benefit from the measure.

There are 962 cities and towns in Texas, each one with its own unique mix of opportunities and challenges. Each one has local leaders who are chosen by their neighbors to represent them on many important matters. This includes serving as a voice for those residents in the legislative process.

However, those elected leaders do not have the time to spend months in Austin to track bills and actively participate in the legislative process. Eliminating their ability to have professionals to represent their citizens’ interests in Austin, or prohibiting cities from paying dues to professional organizations that engage in lobbying, would effectively silence the voice of the men and women who have been chosen by their neighbors to represent them.

Cities currently are authorized to hold local elections on one of two dates each year – in May or November. We anticipate bills being filed that would eliminate the current May uniform election date and require cities to use only the November uniform election date. This change would have severe fiscal implications for cities. Operating a municipal election during the November cycle, with the additional polling locations that are required, will significantly increase expenses when cities already are having a difficult time meeting budgets in this difficult economic environment.

In addition to higher costs, holding municipal elections in November in conjunction with state and federal races can reasonably be expected to have a chilling effect on voter participation in municipal races. Voters will primarily be focused on races for Presidential, Gubernatorial, and Legislative races and there will be less attention paid to local races, resulting in a less-informed and less-motivated electorate.

As Texas’ population grows, traffic congestion worsens, and the state of Texas population is currently projected to double to 55 million people by 2050. The state’s highway capacity cannot keep up with that growth, and all options will be necessary to handle the transportation needs of 55 million people, including public transit. Currently, the state does not provide any state funding for public transportation. We encourage the Legislature to invest in the future of Texas by allocating some funding to expand public transit infrastructure in the metropolitan areas. This would have a positive impact on both affordable housing woes and the current workforce shortage. Public transportation also helps to reduce road congestion and travel times, air pollution, and energy and oil consumption, all of which benefit both riders and non-riders alike.