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Advocate editorial board: Goliad needs to change or drop its economic development program

By By the Advocate Editorial Board
Nov. 2, 2013 at 6:02 a.m.


Municipal development districts

State legislators should examine the operations of the 27 other municipal development districts in the state. It's unlikely the problems in Goliad are isolated examples:

•  Anahuac Municipal Development District

•  Aransas Pass Municipal Development District

•  Azle Municipal Development District

•  Bangs Municipal Development District

• Baytown Municipal Development District

•  Bertram Municipal Development District

•  Corral City Municipal Development District

•  Evant Municipal Development District

•  Fair Oaks Ranch Municipal Development District

•  Kemp Municipal Development District

•  La Vernia Municipal Development District

•  Lakewood Village Municipal Development District

•  Morgan's Point Municipal Development District

•  Murphy Municipal Development District

•  Natalia Municipal Development District

•  Oak Point Municipal Development District

•  Overton Municipal Development District

•  Ovilla Municipal Development District

•  Paducah Municipal Development District

•  Point Comfort Municipal Development District

•  Presidio Municipal Development District

•  Rio Hondo Municipal Development District

•  Rising Star Municipal Development District

•  Rockdale Municipal Development District

•  San Diego Municipal Development District

•  Shenandoah Municipal Development District

•  Staples Municipal Development District

A mess five years in the making can't be fixed overnight.

Since 2008, the city of Goliad funneled $1 million into an unchecked economic development program. In the wake of a Victoria Advocate investigation, Goliad leaders have taken first steps toward fixing the mess.

Their best move was to stop adding to it. Once the Texas Rangers began an official investigation, Goliad City Council members had little choice but to stop lending money or issuing grants through the program. It also was wise to hire an auditor and a lawyer to sort out the mess.

However, it's unlikely the same leaders who got Goliad into this will be able to see their way out of it. Those running the economic development program developed an attitude of scratching each others' backs rather than being good stewards of taxpayer money.

This developed because a fundamentally flawed system allowed it. A little-known 2005 law expanded the use of municipal development districts across Texas, and Goliad leaders jumped on board, hoping to collect even more sales tax revenue and - here's the rub - avoid any state oversight.

Thus, few asked why when Goliad issued loans without signatures or adequate collateral to doomed businesses or, in some cases, to those that never even opened. Few asked why when city officials couldn't properly account for the tax money collected and spent.

Erika Bochat was Goliad's Main Street director when the town converted its state-regulated economic development corporation into a municipal development district with no state oversight. Goliad set out to handle the development district properly, she recalled, "but then small-town politics comes into play."

"You have to live with these people," she said in an Advocate story examining how the mess started. "That's what made it complicated."

This complication will remain until Goliad dumps its development district, either by ending its half-cent sales tax collection or by going back to an economic development corporation. Tax dollars should never be spent without accountability.

Legislators must heed Goliad's lesson by changing or killing municipal development districts across Texas. Three more development districts have formed since the Goliad mess came to light, bringing the statewide total to 28. It's highly likely similar problems exist in many of these other development districts, which are mainly centered in small towns like Goliad.

Given human nature, it's naive to think otherwise. Who thinks it's wise to have people spending other people's money with no oversight?

No, Goliad can't find a way out of its $1 million mess overnight. But the path toward financial responsibility is clear.

This editorial reflects the views of the Victoria Advocate's editorial board.

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