What happened: The Midland Development Corporation (MDC) is an economic development corporation created by Midland voters in 2002 and funded by a dedicated 0.25% of the city’s sales tax. Each year, that quarter-cent generates millions of dollars that the MDC board proposes for projects intended to strengthen Midland’s economy.

For fiscal year 2025-26, the city council approved a $16.2 million MDC budget. As of FY 2024, MDC held more than $28 million in cash and investments. By comparison, the city’s FY 2025-26 budget is about $461 million.

Why it matters: The MDC’s quarter-cent sales tax will always be collected by one entity or another. It cannot go back into taxpayers’ pockets. The question is, how do we spend the money to benefit Midlanders best? If not the MDC, then who? Supporters argue that spending on economic development acts as a force multiplier.

If projects grow the tax base, the city collects more sales and property tax revenue to fund core services like police, fire, and streets. MDC can also cover projects that the city might otherwise pay for itself. Currently, 35% of MDC’s budget goes to infrastructure. 

The big picture: Midland’s total sales tax is 8.25%. The state takes 6.25%. Of the remaining 2% for local entities:

  • 1.25% goes to the City of Midland (with 0.25% earmarked for MDC)

  • 0.50% goes to Midland County

  • 0.25% goes to the Midland Hospital District

Zoom out: MDC is a Type A corporation, meaning it focuses on projects that create jobs, such as industrial development, infrastructure, and business recruitment. Its seven-member board, appointed by city council, can review and negotiate incentive agreements, but every dollar still requires city council approval. Council also has the authority to remove board members.

Go deeper: In the last decade, MDC has funded about $130.2 million in projects, including:

  • $40 million for new roads and infrastructure.

  • $8.4 million in healthcare collaborations, such as partnerships with Texas Tech Health Sciences for physician assistant and psychiatry fellowships.

  • $17.7 million in higher education and workforce training.

  • $63.7 million to support new and expanded businesses, including $6.5 million for Costco, and $50 million collectively for the downtown Tapestry and Omni hotels.

Pro:

  • A dedicated economic development fund prevents competition from the city’s general fund for city services like public safety or parks.

  • MDC can move faster than the city’s annual budget cycle, responding quickly to recruitment or infrastructure opportunities.

  • Sales tax is a consumption tax, meaning residents and visitors share the cost, unlike property tax, which falls solely on property owners.

  • Counterpoint: Sales tax is still public money. Incentives must include clear job, wage, and investment targets, with clawbacks if companies don’t deliver.

Con:

  • The return on investment isn’t always clear. Not every project achieves its promised economic impact.

  • Long-term agreements can limit flexibility if conditions change.

  • Some projects, like the Bush Tennis Center deal, required reevaluation and cancellation, resulting in lost time.

  • Counterpoint: MDC uses performance agreements, audits, and public meetings to monitor compliance. City Council still has final authority on all economic development agreements.

What to ask:

  • How much of MDC’s budget do citizens think should go to infrastructure versus business incentives?

  • How many projects in the last five years met job and investment targets? Did MDC enforce clawbacks when they didn’t?

  • How does Midland’s incentive spending compare to peer cities?

  • Do MDC’s priorities align with the city’s long-term capital needs?

The bottom line: MDC is one of the tools in the city’s economic development toolbox. They will always spend their quarter-cent. A large cash reserve does nothing for citizens. The choice isn’t whether to use the money, but whether it funds the right projects that clearly benefit Midland residents. If you don’t believe economic development is the best use of the quarter-cent sales tax, then what should it fund instead?