From The Texas Tribune
Texas leaders want voters to OK property tax revenue growth over 2.5 percent. They couldn’t get 4 percent in 2017.
The leaders of both legislative chambers say they will be united this year — even if cities and counties push back — and that local officials should come to Austin with solutions in hand if they don’t like new proposals.
Flanked by the state’s top legislative leaders, Gov. Greg Abbott announced Thursday that both chambers of the Texas Legislature will push to curb property tax growth by limiting how much money local governments collect without voter approval.
Fellow Republicans Lt. Gov. Dan Patrick and House Speaker Dennis Bonnen, as well as the heads of both chambers’ tax-writing committees, joined Abbott in making the announcement. Their news conference followed the filing of identical bills in both chambers, Senate Bill 2 and House Bill 2.
Abbott said it was “completely unprecedented” for lawmakers to be so closely aligned on such an important issue this early in the session.
“Most importantly, it’s a testament to the voters in this state,” he said. “The voters demanded this, and this demonstrates that the Texas Legislature is responsive to the needs of our voters.”
But two Democrats who sit on the House Ways and Means Committee said the proposed legislation is far from being a done deal. And an advocate for city governments said there are plenty of unintended consequences that need to be worked out. Chief among them is ensuring that cities aren’t suddenly unable to afford police officers and firefighters.
Thursday’s bills seek to require voters to approve tax rates that allow government entities like cities, counties and school districts to collect an additional 2.5 percent in revenues from existing property compared with a previous year. The threshold would not apply to small taxing units — those with potential property and sales tax collections of $15 million or less.
Currently, cities and counties can collect an additional 8 percent in revenues without involving voters. But even then, residents must collect enough signatures to force an election. The new pair of bills would automatically trigger what’s called a rollback election. If voters shoot down the measure, the government entity would have to set a tax rate that allows it only to collect revenues from existing properties that are less than 2.5 percent more than the previous year.
The rollback rate is also based on the appraised value of properties within a taxing unit’s borders. That means a city or county could hit the rollback election threshold without changing its tax rate — or even if it lowers the tax rate — if there is a significant increase in local property values.
The legislation does not apply a cap to individual property tax bills. Because it would limit only how much government entities can collect in property tax revenues before getting voter approval, an agency could stay below the rollback election rate, and that portion of a property owner’s tax bill could still increase.
Local officials are almost certain to to push back. Bennett Sandlin is the executive director of the Texas Municipal League, which advocates for city governments. His organization estimates that about 150 of the state’s largest cities would be affected if the legislation passes. He said that the rollback threshold is lower than inflation and could prevent cities from paying for first responders’ raises, filling potholes, and keeping recreation centers or libraries open.
“It is actually a service reduction,” Sandlin said.
The legislation filed Thursday sets the rollback threshold well below the amounts that drew heavy opposition from city and county leaders two years ago, when the House and Senate could not agree on where to place the rollback rate. The Senate landed at 4 percent. The House landed at 6 percent.
“Starting at 2.5 it seems like a pretty uphill battle,” state Rep. Eddie Rodriguez, D-Austin, said at a press conference Thursday afternoon.
Rodriguez also noted that the House has 12 more Democrats this session than in 2017.