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By CINDY MALLETTE
Staff Writer

The city of Tyler took a remarkable step on Thursday - it paid off the last $3 million owed in general obligation debts.

Tyler is one of only a handful of Texas cities that isn't using bonds to pay for capital improvements. Since 1995, it's paid for road, parks and economic improvements through a half-cent sales tax, and all projects have been funded by cash on hand.

"I think the significant thing about this day is that, when so many cities are worried about their funding, we have the opportunity to get out of debt," said City Manager Bob Turner.

City leaders marked the occasion by signing a symbolic check for the final debt amount. Close to 100 people came to the Tyler Pounds Regional Airport main terminal to watch the event and celebrate the city's achievement.

Mayor Joey Seeber praised the foresight of State Sen. Kevin Eltife, who, as mayor, led the campaign for voters to approve the tax.

"We would not be able to have this day without his vision and leadership," Seeber said.

Eltife said he had to convince a lot of people the city really could pay for major projects using money raised from a sales tax, and he said few people believed a half-cent sales tax could actually lower property taxes.

"I told people who voted against this that we'd earn their trust," he said. "Well, I think we've earned their trust."

City leaders originally promised the half-cent sales tax would lower property taxes by 15 percent. Since 1995, property taxes in Tyler have actually dropped 60 percent, falling from 52 cents per $100 valuation to just 20 cents and saving $134 million in property taxes over that time. Tyler has the lowest tax rate of Texas communities similar in size: Cities such as Abilene, Denton and Beaumont - all with populations around 100,000 - have tax rates exceeding 62 cents.

"The biggest point of today is not that we're paying off debt," Eltife said. "The biggest point today was that we kept our promises."

The other goal was to be debt-free by 2008, which the city accomplished on Thursday. Seeber said that from 1964-1989 the city floated six to seven bond issues and spent an average of $3 million per year on capital improvements. Now, the city uses $11 million each year to pay for those projects using money collected through the sales tax. Some of those major capital improvement projects included the Glass Recreation Center, Tyler Pounds Regional Airport and Faulkner Park. The tax also paid for more than 40 street and traffic projects totaling $39.8 million.

"We're not paying (for those projects) with debt over 20 to 30 years," Seeber said.

Tyler has become a model for other Texas cities that want to avoid going into debt to pay for necessary improvements. Eltife said Mesquite city leaders wanted to use a similar plan to pay for capital improvements and presented what they called the "Tyler Model" to voters for approval.

Eltife gave credit for the sales tax's success to city leaders who continued to support the funding plan during their administrations and to city staff members who manually carried out the plan.

"They're the ones that made this happen," he said. "It's easy to make the promise, but the hardest part is carrying out the promise."