Texas State brings economic benefits and revenue to San Marcos, but the university’s presence causes a strain on the city’s budget because the institution is not subject to property taxes.
The university is a state institution, which means by law it is exempt from property taxes to the city, county or school district. The City of San Marcos receives most of its funding for city improvements from property taxes. San Marcos is tight on resources from a lack of funds, as are many local and state budgets in the current economic climate.said the city’s relationship with the university is not a negative one, but the reality that the institution does not pay property taxes to the city creates challenges.
Steve Parker, assistant city manager and director of finance, said the property value of all buildings on the Texas State property is $1.4 billion. He said the property value is divided by 100 and multiplied by the city’s tax rate to determine the total amount San Marcos would receive in revenue if Texas State did pay property taxes, which is $7.4 million.
“We as a community have to try to find ways to manage our budget and be able to provide regulatory compliances with a smaller amount of funds because we’re not receiving those dollars from the university, and by state law they don’t have to,” said.
Guerrero said the majority of the revenue used to pay for improvements such as streets, water pipes, city employees, fire trucks and police cars comes from property taxes.
Guerrero said much of the burden to maintain the city “falls on the shoulders” of the residents who live in San Marcos and pay property taxes. He said students are a part of those residents, because whether someone is paying a mortgage or renting an apartment, a part of their money goes toward property taxes.
Bill Nance, vice president for Finance and Support Services, said though the university does not pay property taxes, there are situations in which Texas State shares certain costs with the city. For example, the university reimburses the city for one half of the city habitat conservation plan manager’s salary because the job deals with environmental issues affecting the river. The work benefits both Texas State and the city.
Guerrero said the most sustainable way for the city to generate funds is through property taxes, but there are many other methods for San Marcos to obtain its finances. He said the city works with organizations such as the Capital Area Metropolitan Planning Organization and the Capital Area Council of Governments to secure grants and additional funding from state and federal agencies.
Parker said the city ultimately does receive economic benefits from the university because of the students it attracts.
“Even though the actual buildings aren’t on the tax roll, people are still going out shopping, keeping restaurants open, keeping people employed who go out and buy stuff at Target and Wal-Mart and so forth,” Parker said.
Guerrero also said the amount of regional attraction the city gets from Texas State in terms of economic development is “tremendous” for San Marcos.