Victoria Economic Development Corp.'s tax allocation questioned

Melissa Crowe By Melissa Crowe

Oct. 16, 2012 at 5:16 a.m.
Updated Oct. 17, 2012 at 5:17 a.m.

Some members of Victoria City Council want to look at the Victoria Economic Development Corp.'s books before they give it more sales tax dollars.

They asked their colleagues to withhold a $384,000 sales tax allocation Tuesday until they reviewed financial records.

But that didn't happen.

In a split 5-2 vote, the council approved the Victoria Sales Tax Development Corp.'s annual budget, including the $384,000 sales tax allocation.

While the council members agreed they supported funding the economic development group, three members said they wanted detailed financial records first of how the money is spent.

Dale Zuck, a Victoria resident, brought the issue up during public discussion, asking why the economic development corporation was not held to the same standards as other groups that receive tax dollars.

"The public deserves to know how our tax dollars have been spent," Zuck said.

He wanted to see a five-year audit on VEDC and a detailed 2013 budget.

Council members Josephine Soliz, David Hagan and Emett Alvarez supported tabling the vote.

"It's not a matter of penalizing VEDC," Hagan said. "I just wanted the information before I voted in favor of it."

Dale Fowler, president of VEDC, said any financial records would need approval from the sales tax board of directors before being released.

"Whatever the Sales Tax Development Board asks us to do, that's what Victoria Economic Development Corp. will elect to do, and that will not be any challenge at all," Fowler assured the City Council. "Maybe this will help in your minds a little bit to think of Victoria Economic Development Corp. as a contractor ... We elect to provide you a service, which is to market this community. I hope you're seeing some returns on your investment on what we're doing."

Fowler said the $384,000 would cover salaries for the four-person staff, insurance and benefits, rent to the city, telephone services, staff training and development.

"Of course, you can also look at it that it's your contract for marketing," Fowler said. "We're the folks out front doing the marketing. ... The only way you lose in these marketing efforts is to slow down, then you lose relationships."

Fowler presented the council with a proposed budget, which satisfied most of the council.

Councilman Paul Polasek said he had no issue with the budget.

"I don't have any reason to suspect there's any problem," Polasek said. "I think they've done a good job."

However, Hagan said the document was too broad.

The proposal listed three expenses: staffing expenses at $418,700, general operations at $60,500, and prospect development at $70,800.

Of VEDC's total $550,000 revenue, nearly 70 percent comes from sales tax dollars, 20 percent from private investments and 10 percent from the county and navigation district.

"I don't expect we'd see anything that would raise any eyebrows," Hagan said. "When you give $384,000 of taxpayer money, you need to be fully aware of all the particulars of the organization."

Mayor Will Armstrong said he was concerned about the message the split vote sent to prospective businesses. He said VEDC's criticism comes from a small group.

"This situation in our community from this rather small group of people who have influence on this council is sending a mixed message to the very people we want to impress and bring to our community," Armstrong said.

He said he has "utmost faith" in VEDC's management, its board of directors, the oversight it gets and its performance record.

"If the sales tax board wants an audit, they'll ask for it," Armstrong said.

Councilman Joe Truman, who serves on the sales tax board with Armstrong and Councilman Tom Halepaska, said he would request an audit of VEDC "to alleviate citizen's concern."

"Transparency is always a good thing to have in government," he said. "It's just to help my constituency feel more comfortable about spending that sales tax money. ... I have full confidence that no irregularities will be found."

VEDC, which is a public-private corporation, answers to the City Council through the sales tax corporation, Truman said.

"They will have the information very shortly," he said.

The remainder of the sales tax development corporation's budget included funding for utility projects, debt service to the Youth Sports Complex Project, as well as administrative and engineering fees. All together, the budget totals $8 million.



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