City of Round Rock prepares as comptroller menaces their Dell deal

By: Fred Cantu / CBS Austin

What would happen if Round Rock suddenly lost millions of dollars in sales tax revenue? That’s a real possibility if the state changes the way it treats online purchases. Round Rock is doing quite nicely these days thanks to an agreement in place with Dell Computers that has created jobs and sales tax revenue here for more than 25 years.

Dell picked Round Rock as its home after the city offered to share the local sales tax it collected from Dell customers with the computer maker. But State Comptroller Glenn Hegar says online shoppers across Texas are wondering why their local sales tax goes to Round Rock just because they bought their Dell online. He notes, “As e-commerce continues to grow, more and more taxpayers will ask the question: why are they paying local sales taxes that are not going to their local communities?”

Dell now accounts for 35% of the sales tax Round Rock collects. So what if the agreement is yanked out from under them? Mayor Craig Morgan answers, “Round Rock would lose $30 million gross, $20 million to our general fund.”

Mayor Morgan says Round Rock would have to cut some major core services or raise the property tax to make up the difference. He explains, “If we were to maintain the same level of services and the Dell agreement goes away that would be a 13 penny hike to our local citizens just to get where we are right now.”

Former Round Rock Mayor Charlie Culpepper signed the original 1993 agreement that brought Dell to Round Rock. He wants the governor to look into how proposed changes might impact it. Culpepper says, “I want to know what Governor Abbott thinks about this because we have a legal agreement between Dell and the City of Round Rock that expires in 2053 and the comptroller wants to cancel that and take that money and do something else with it.”

Meanwhile Mayor Morgan says he looks forward to discussions with the comptroller to help him meet his goals while keeping a good thing going.