Council reviews sales‑tax allocation and a preliminary plan to create a fire district from a share of crime‑control funds

Keller — The Keller City Council received a staff analysis on June 17 that explored how the city’s 2% local sales tax (the city’s portion of the 8.25% state rate) is currently allocated and what would change if council used part of the crime-control sales-tax allocation to seed a separate fire control and prevention district.

“We have briefly discussed this, as a possibility, or to support a discussion with possibly dedicating, a district for the fire, department,” the mayor said before the presentation. Finance staff member Lupe Orozco presented an analysis of the current allocation and multiple hypothetical reallocation scenarios.

What staff presented

- Current allocation: Orozco said the city currently receives 2% of the 8.25% sales-and-use tax remitted by retailers in city limits. That 2% is distributed as 1% to the city general tax base, 0.5% to the KDC (development fund), 0.25% to the KCCPD (crime control and prevention district) and 0.25% for street maintenance. “The city receives 2% of the 8.25 sales in use taxes that are remitted by retailers within LRC limits,” Orozco said.

- Timing: KCCPD debt is scheduled to drop off in coming years, which creates a potential funding window. Orozco said the KCCPD fund balance has been permitted to grow deliberately to cash-fund prior PD facility renovations and similar one-time needs.

- Hypothetical reallocation: Staff modeled scenarios in which a fraction of the KCCPD allocation would be moved to a new fire district (which would still require voter approval to create). A scenario that devoted an eighth of the city’s sales-tax allocation to a fire district reduced the crime‑control fund balance steadily in projections; staff stressed the need to identify which expenditures would shift to the new district to avoid leaving a structural shortfall for crime control operations.

- Tradeoffs: Orozco highlighted planned technology and equipment needs — notably the NECCO Motorola radio replacement project and a potential $3.5 million, multi‑city radio purchase — and reminded council staff had applied for a grant for part of that expense. Staff also explained how reassigning sales-tax allocations would likely force some operating costs into the general fund or require reprioritizing projects funded by the KDC (development fund).

Council discussion

Council members raised concerns about diverting revenue from public safety and questioned whether the city would truly free up new money or just reshuffle existing funds. Councilmember said the conversation would likely require a reexamination of KDC priorities and of whether projects such as the planned Northeast Park should be re-sequenced or delayed.

Mayor pro tem and others pressed staff to analyze: (1) what crime-control and KDC adjustments would be needed to support a fire district, (2) whether a voter referendum would be required (staff said yes for creating a district), and (3) how one-time capital costs (e.g., ladder trucks) could be financed under each scenario. Staff said the city is capped under state law at the 2¢ local rate, so creating a new sales-tax district would require shifting allocations among the existing local uses rather than adding tax capacity.

What the council decided

Council did not vote to reallocate funds. Staff said the analysis was preliminary; the next steps include further financial analysis, discussion with KCCPD staff and a possible work-session follow-up. Orozco and finance staff will return with additional detail on options for reprioritizing KDC projects or otherwise funding a fire district.

Ending

No formal action was requested or taken; staff will refine scenarios, test the rate and revenue assumptions further and bring a more detailed plan back to the council. Council members repeatedly emphasized that any district creation would require voter approval.