Fact Check
Please check here frequently for factual information regarding MDDs and the upcoming election.
Statement: Voters in the MDD (Municipal Development District) ETJs (Extra Territorial Jurisdiction) will be voting on a measure in which they will not have representation.
Fact: This statement is false. If voters approve this ballot measure, a board for the MDD will be established with members appointed by the New Fairview City Council. Board members must be residents of the MDD district (New Fairview city limits and ETJs).
Residents in the ETJs will have further representation in determining how MDD funds are spent. City officials will conduct a survey of all residents in the MDD for feedback on their priorities for infrastructure projects and economic development efforts.
Here is a portion of the State statute addressing this topic.
TEXAS LOCAL GOVERNMENT CODE
TITLE 12. PLANNING AND DEVELOPMENT
SUBTITLE A. MUNICIPAL PLANNING AND DEVELOPMENT
CHAPTER 377. MUNICIPAL DEVELOPMENT DISTRICTS
Link to Texas Local Government Code, Chapter 377
Sec. 377.051. COMPOSITION AND APPOINTMENT OF BOARD.
(a) A district is governed by a board of at least four directors.
(b) The board is appointed by the governing body of the municipality that created the district.
(c) Directors serve staggered two-year terms. A director may be removed by the appointing municipality at any time without cause. Successor directors are appointed in the same manner as the original appointees.
(d) To qualify to serve as a director, a person must reside in the municipality that created the district or in that municipality’s extraterritorial jurisdiction. An employee, officer, or member of the governing body of the municipality may serve as a director but may not have a personal interest in a contract executed by the district other than as an employee, officer, or member of the governing body of the municipality.
Statement: Property owners in the New Fairview Extra Territorial Jurisdiction (ETJ) pay property tax to New Fairview as part of their tax bill.
Fact: No. New Fairview ETJ property owners DO NOT pay city property tax because they are not located in the city limits of New Fairview. Their property tax bill includes payments to the county in which they live (Wise or Denton county) and to the Municipal Utility District (MUD) which provides utility service to those residents. Sales taxes are not part of a property tax bill. Each time you buy something, it is a tax that is paid to the state and to the local entities where that purchase is made. And, it is paid by residents and non-residents.
Statement: Approval of the New Fairview MDD will eliminate the half-cent property tax reduction residents currently enjoy.
Fact: No. As previously stated, the approval of the MDD does not raise New Fairview’s sales tax rate and does not increase the property tax rate for residents. The 1.5 cents currently collected by the City for its general fund will be reallocated with a half cent of that going to the MDD.
So what does the one cent going to the general fund mean? Like most municipalities in Texas, New Fairview uses the sales tax collected to supplement its general fund budget thereby relying less on property taxes to fund city services. As a matter of policy, New Fairview dedicates a half cent of its general fund sales tax collection specifically for property tax relief. This policy will not change.
No matter the outcome of the election, a half-cent of the one cent dedicated to the general fund will still be used for property tax relief. It is earmarked as general fund because the sales tax collected supports the city’s efforts to keep property taxes low. That’s why it’s important to shop local – those dollars stay in New Fairview. Among the MDD funding plans – economic development for the city.
Statement: “If approved the City of New Fairview will be able to add a half-cent to the sales tax to the existing sales tax already being paid by New Fairview residents.”
Fact: There will be NO increase in sales tax to the City of New Fairview residents (residing within the city limits) because they are already paying the maximum sales tax allowed. Under state law, the sales tax cannot be more than 8.25 cents.
Of the 8.25 cents collected within the city limits, the State of Texas receives 6.25 cents while Wise County receives .5 cent (Wise County voters previously approved a half-cent sales tax to be collected by the county). This leaves the City of New Fairview the ability to collect no more than 1.5 cents on sales made within the city limits. Please note that the sales tax payable in the ETJ’s is currently different than sales tax paid within the city limits.
IF the MDD passes, New Fairview residents living in the city limits will see a reallocation of the existing half-cent from the General Fund to the MDD Fund.
IF the MDD passes, residents in the Wise County ETJ will see an additional one-half cent added to the existing sales tax collected bringing the total to 7.25-cents, up from 6.75-cents.
IF the MDD passes, residents in Denton County ETJ will see an additional one-half cent added to the existing sales tax collected bringing the total to 6.75 cents, up from 6.25 cents.
Visit the Sales Tax Detail page here for the correct information.