Consultant: Taxes key to fixing Galveston town money woes

Eric Walsh, a CPA with H.J. Umbaugh and Associates, on Monday presented what he said he hoped was the solution to the financial morass gripping Galveston in recent months.

“Tonight we have an ordinance in front of you for a reestablishment of a CCD fund,” Walsh told the crowd. “What is a CCD fund? It’s a cumulative capital development fund, a tax supported fund. This would additionally be new revenue for the town, but it’d also be a new additional tax.”

According to Umbaugh's website, the firm provides financial advisory services to cities, towns, counties, municipal utilities, schools, libraries and other governmental clients. The accounting firm first began working with the town of Galveston in January.

Walsh went on to explain exactly what the CCD fund contained.

According to Walsh, the CCD fund can be used for any legal or capital purpose to generate revenue from additional property taxes. Galveston’s CCD fund would happen in three phases.

Walsh said in 2017, the impact would be 1.67 cents per $100 of real property. In 2018, the impact would be 3.33 cents per $100, and it would be 5 cents per $100 in 2019. He went on to add that any resident who pays property taxes in Galveston would pay the additional taxes unless they’re already at the tax cap.

“If you have a $25,000 residential homestead, your impact in the first year will be just over a dollar,” Walsh said, “and the third year will be about $3.40 a year.”

He then said that since average home value in Galveston ranges from $80,000-$90,000, the impact would be greater but still not significant.

“If you have a $100,000 homestead, you’d pay $5.50 extra in the first year and around $16 in the third,” he said.

The talk of raising taxes prompted some in the crowd to wonder how much money would be generated in revenue. Walsh said such a fund would bring in about $4,000 extra in 2017, about $7,500 in 2018 and about $11,500 in 2019 and beyond.

According to Walsh, it was important to introduce a reading of the CCD fund now because it would be too late to do so in the July council meeting. He said the fund has to be established by Aug. 1, and its consideration must be advertised at least 30 days beforehand, too. If council members waited until July, Walsh said, it’d be too late.

“You either have a spending problem or a revenue problem,” Walsh said. “You can fix your spending all you want, but until you fix your revenue problem... And this is one step toward fixing your revenue side. No one likes to talk about raising taxes, but it’s a minimal impact to start creating revenue."

When asked by a resident about how much Umbaugh is getting paid from all of this, Walsh said that the total cost of fixing the books was $10,000. However, he went to say that the city would be billed over a five-month period at $2,000 per month.

Walsh said he believed a CCD fund, along with the rest of Umbaugh’s support, will help begin to turn around the town of Galveston.