Manvel approves 50/50 interlocal sales-tax split with ESD No. 3 for annexed ETJ areas if Prop A passes

The Manvel City Council on Monday approved an interlocal agreement with Brazoria County Emergency Services District No. 3 (ESD No. 3) that would split sales-tax revenue 50/50 for areas in the city's extraterritorial jurisdiction (ETJ) if voters approve Proposition A, which would authorize the ESD to levy a sales tax.

The agreement takes effect only if the ESD's sales-tax proposition passes. City staff and ESD representatives told the council the state caps combined sales taxes at 8.25 percent and that adding the ESD's tax could reach that cap in certain areas. Bobby (city staff member) explained the arrangement is intended to protect the city's future revenue when annexation occurs: rather than the ESD keeping 100 percent of the new sales tax in areas that later become part of the city, the ESD has agreed to a 50/50 split for the city upon annexation.

"If the sales-tax election is effective, instead of getting nothing when we annex an area, we would get half," Bobby said. He added the agreement was favorable because if the proposition fails, "there's nothing to worry about" and the agreement would have no effect.

Council discussion focused on clarifying that the measure would not change the city's current sales-tax receipts inside city limits. Council members also asked what the city was conceding; staff explained that the agreement does not alter current city collections but commits to a split of the ESD's new local portion in annexed ETJ areas should the ESD sales tax be enacted by voters.

The council voted 5-1 to adopt the interlocal agreement; one council member opposed. ESD No. 3 had approved the agreement earlier in a special meeting, staff said.

City officials said the agreement is intended to be a cooperative step with the ESD to support emergency-services funding while preserving municipal options for future annexation and service provision.