Businesses Balk at Tax Hike to Fund Dallas-Fort Worth Rail Expansion

Key business leaders reiterated Thursday their unflinching opposition to using higher sales taxes to pay for a $4 billion to $5 billion suburban rail expansion in North Texas.

The rail expansion — and the extra sales tax seen by many as necessary to build it by 2025 — is the Regional Transportation Council’s top priority in 2008. But several key lawmakers and others who support the idea have said that business opposition, led by Texas Instruments, will likely doom any attempts in 2009 to win lawmakers’ support for higher taxes.

Twice before, state lawmakers have rejected the proposal, which in its most general form would allow cities to exempt up to a penny of sales taxes used for transit from the overall sales tax cap of 8.25 percent. That would mean cities that choose to invest in rail could impose sales tax rates of up to 9.25 percent.

The RTC’s rail committee co-chair, Fort Worth City Council member Jungus Jordan, opened a meeting Thursday with business leaders with a plea to find common ground.

"Since today is Valentine’s Day," Mr. Jordan said, "we are all going to walk out of here as partners and share the love, and we will all have roses behind our ears."

But by day’s end, there were few roses being worn, and not many olive branches offered either.

The message from Phil Ritter, a former Dallas Area Rapid Transit board member and now senior vice president at Texas Instruments, boiled down to this: Yes to more rail in North Texas, but no to higher sales tax rates.

Higher rates could make Texas a less attractive place for businesses, said Mr. Ritter, also a former Regional Transportation Council member.

In addition, he said, keeping sales tax rates low is important in case the state needs to raise them some day for an emergency. If the rates were too high at that point, he said, lawmakers would be more likely to eliminate valuable tax exemptions that businesses now rely on.

Other companies — including regional powerhouses like J.C. Penney, EDS and Lockheed Martin — have signed on to a position paper distributed by Mr. Ritter that calls for other ways to pay for expanded light rail. For instance, they want area transit agencies to borrow more heavily and to consider partnerships with private companies. Non-transit cities should be encouraged to pledge to transit sales taxes now used for other purposes.

But many of those ideas are already being explored by the transit systems, and won’t produce the nearly $200 million a year it would cost to operate the expanded rail network, proponents said Thursday.

"This is not a plan to build out the rail system by 2025," said DART board member Mark Enoch, referring to the position paper distributed by Mr. Ritter. "It’s a plan for how to avoid raising the sales tax rate."

Voters want rail more than they want lower costs for businesses, and that is a fight they may have to take to the Legislature again, Mr. Enoch said.

Still, oilman Walter Humann, one of the key drivers of the rail initiative, said the proposal could be dead in Austin if rail proponents can’t win over businesses.

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