Page 82 - Florence County, SC Florence County 2032: Connecting Our Past, Defining Our Future

SALES TAX FOR ECONOMIC
DEVELOPMENT: A TEXAS BEST PRACTICE

The use of sales tax for economic development
purposes is a financing mechanism which economic
development professionals in the county expressed
an interest in during the Comprehensive Plan process. became popularly referred to as the Section 4A
The Texas Municipal League’s 2017 Economic economic development sales tax. The Section 4A
Development Handbook provides a primer on the tax was generally available to cities that were located
use of Sales Tax for Economic Development within within a county of fewer than 500,000 and that had
Texas, referred to as 4A and 4B taxes. The handbook room within the local sales tax cap to adopt an
states that “the Texas Legislature has enacted several additional sales tax.
laws that would allow state and local government
funds to be used to promote economic development. In 1991 the Legislature authorized a new type of sales
First, in 1989, the Texas Legislature amended the Act tax, a Section 4B sales tax. This legislation authorized
by adding Section 4A, which allowed the creation a one-half cent sales tax to be used by certain cities
of a new type of development corporation. The to promote a wide range of civic and commercial
legislation provided that a Section 4A development projects. The popularity of the Section 4B sales
corporation could be funded by the imposition of tax led the Texas Legislature in 1993 to broaden its
a local sales and use tax dedicated to economic availability to any city that was eligible to adopt a
development. The tax could be levied only after its Section 4A sales tax. In other words, most cities in a
approval by the voters of the city at an election on county of less than 500,000 could adopt either the
the issue. Section 4A or the Section 4B sales tax if they had
room in their local sales tax.
The proceeds of the Section 4A sales tax were
dedicated by statute to economic development As of 2017, at least 586 cities in the state of Texas
projects primarily to promote new and expanded have either a Section 4A or a Section 4B sales tax for
industrial and manufacturing activities. This authority economic development.

for the Region Reimagined initiative to support manufacturing.
determine the most logical opportunities
for Pottawatomie County. • Develop a “buy local” campaign for Pottawatomie
County. Work to educate residents on the
• Seek to enhance opportunities for small
importance of sales tax revenue to the County
manufacturing. Manufacturing is already a key
and local cities and ensure residents know
industry with the County. With the Caterpillar
where the County boundaries are. For example,
plant expansion in Wamego and the new truck
the portions of the City of Manhattan within
by-pass on Highway 99, the County remains
Pottawatomie County generate a significant
well-positioned to take advantage of additional
portion of the County’s sales tax revenue but
manufacturing opportunities. Ensure adequate
infrastructure and technologies are available to

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Adopted - August 19, 2019 The Future County 5 | Economic Opportunity | 75