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May 6 Elections Candidates & Issues
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Galveston Bond Referendum
by Sandra Arnold
Monday, April 17, 2017

With the May 6 bond voting day drawing near, proponents and opponents of the city of Galveston’s $62 million proposed tax make their final arguments on social media to convince undecided voters. The vastly different arguments have spawned civil conversations and urged voters to take a closer look at how local government spends our dollars.

“Learn more,” said Kitty Allen, co-founder of Citizens For A Better Galveston in a Facebook post. “Don’t rely on alt (alternative) facts and fear-mongering. Bond covenants are very restrictive.

 Sean Cameron, a former candidate for city council with a master's degree in Public Administration from the University of Texas, explains that while it’s true that bond covenants should be restrictive, it’s imperative that the language in a bond be specific as to not allow for monies to be spent elsewhere.

Referring to wording in the 2016 City of Galveston Budget Executive Summary Cameron said on a Facebook post, “This statement appears that they are grouping in bond funds from the 2008 bond measure that was for the West End for 2016-2020 Capital Improvement Plan,” said Cameron. “How can this be labelled as "fear mongering,” “alt facts," "misinformation," when the information comes directly from the city? For the record I am in favor of improvements to infrastructure and support it 110 percent. The right to question your own government and elected officials is absolute and should be encouraged. As citizens it's our responsibility to keep those that govern in check.

Susan Fennewald, a former city councilwoman, posted in the Galveston Daily News comment section that she’s undecided and needs more information regarding the numbers to ensure she’s making an informed decision.

“Are bonds the best financial approach?” said Fennewald, in a GDN post. “Some people (Brian Maxwell for example) say yes. Some say no. Right now I say no. The cost of the bonds seems unnecessary when all projects are small. Mr. Maxwell may be right about the inflation cost of construction - but there's no way for me to know. I do know that bonds are expensive though. Using the same tax increases, but devoting the money to construction rather than debt payment, the $62M worth of improvements could be done and paid for in 11 years. Using bonds the construction lasts 5 or 6 years but the payout continues for the next 25 years.”

According to a Houston Chronicle article, in 2008, Galveston City Council voted to increase water/sewer rates 31.88 percent. The water-rate increase would finance $20 million in bonds for water system improvements. The sewer-rate increase would finance $10 million in bonds for sewerage improvements. Items included transitioning the West End from septic to city sewer/water. City Council voted 6-1, it was passed, the money was never spent on the West End’s septic issue. “Councilwoman Fennewald, who made the motion to approve the increases, said the council needed the increases in order to finance the $91.03 million budget.”

“In the end it all comes down to trust,” said Lisa Blair, a Galveston Island business owner and co-founder of the Citizens For A Better Galveston. “No one who participated in that 2008 bond is running the city now. It's a whole new ball game. I think the current council is trustworthy and conscientious. Everything is not a conspiracy.

Cameron argues that regardless of who’s on council, the bond covenants remain steadfast and trust shouldn’t be a factor.

“On one hand I'm hearing you say "bond covenants are strict" and can only be used for the purposes stated on the ballot,” said Cameron. “Then in the same breath it was the previous council that didn't use the bond funds for the stated purposes. The council may have changed but the structure of municipal bonds haven't changed. So, the covenants must not be that strict if a previous council was able to circumvent the "strict covenants" and use the funds for other purposes. Why would we need to convey blind faith and trust to the current council if the use of the bond funds were so ironclad? I'm sorry but this isn't passing the smell test.

“Trust is something that's built up over time, so eventually the residents will come around if you prove yourself,” said Fennewald, in a GDN comment section addressing the city’s plan in 2016 to issue $70 million in new water and sewer bonds over five years (which didn’t require a public vote). “But words will never be enough, it'll have to be actions over a longer period of time.”

According to the bond language this money can be used on “any other related public infrastructure.” But that’s not the only item of concern. Some are questioning whether it could be used to simply balance the budget and whether the work will be done, while other potential voters are asking whether they are being taxed too much and can everyone afford this new tax?

“Stop with the "fake news" about why you opposed the bond issue,” said Blair in a GDN comment section. “If your (sic) in a business that has small margins every little bit cuts into your bottom line. Just say it. If you can afford to subsidize low income folks as tenants by not raising their rents when taxes and insurance rise then you're being charitable and I applaud you for that.”

The bottom line is that the passage of this bond will increase property taxes, again for the third straight year. In 2014, many Galveston Island property owners who did not qualify for homestead exemption saw upwards of a 100 percent increase in their property taxes coupled with insurance rates spiking to over 40 percent above previous years in some areas of the island.

“Anyone naïve enough to think that these costs won’t be passed on to the consumer are just kidding themselves,” said Hud Hopkins, owner of rental homes on Galveston Island. “With approximately 60 percent of the island comprised of renters, this means that landlords will be put in a position to distribute that cost to the renters – thereby raising rent to compensate for the ever-increasing burdensome taxes place upon us by our local government. Ironically, it will be the business owners who end up profiting the most off this deal if it goes through. They’re promised newly paved roads in front of their businesses and will be able to write off property tax increases and/or pass them along to their customers, while homeowners and renters are left footing the bill.”

According to the City of Galveston’s Bond Election Ordinance Staff Report (Feb. 7, 2017), city taxpayers are still paying off the remaining $8.77 million in outstanding bond principal until 2023. With the new bond tax, quoted at approximately $60 a year using a 3.5 cent increase in the tax rate, taxpayers will see gradual increases beginning in FY2019 and reaching a total of 7 cents in FY 2021.

The GDN quoted city officials stating that “Although the bond sale and actual improvements will cost $62 million, interest will compound actual payments to more than $80 million.”

“The whole thing is structured to give the council flexibility,” Galveston City Manager Brian Maxwell said. “We have lots of opportunity to tweak and change if we need to.”

Not exactly music to Galveston Island resident Pete Nanos’ ears.

“Before anyone votes to give more money to the politicians perhaps you should investigate how your money has been spent in the past,” said Nanos, in a GDN comment section about the bond. “The city used tax money for construction of a sidewalk along Stewart road from 89th Street to the soccer fields. The cost was agreed to at $800K but due to a mistake in book keeping the project was halted. The problem is that the way it was pieced together made the parts that were completed unusable. The forms that were laid for the continuation were abandoned so that money spent for those forms was wasted because they will require being redone, adding more to the final cost. This has been abandoned for some time now with no one saying when it will be completed. This will be over $1 million dollars when completed and is a total waste of taxpayer money.”

Regardless of how you vote, both proponents and opponents of the bond encourage residents to vote on Election Day May 6. Early voting will take place from April 24 to April 28 and May 1 to May 2.

About the author: Sandra Arnold has 21 years of experience working for both county and federal governments. She is a U.S. military officer who moved to Galveston Island in 2010 following a yearlong deployment in Afghanistan and is currently preparing for a yearlong deployment to the Middle East. She and her husband, Hud Hopkins, own a property rental company on Galveston Island.

Thank you for your time and consideration.

Sincerely,

Sandra Arnold



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