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Home | Tag Archives: property tax

Tag Archives: property tax

Texas leaders want voters to OK property tax revenue growth over 2.5 percent. They couldn’t get 4 percent in 2017.

Flanked by the state’s top legislative leaders, Gov. Greg Abbott on Thursday announced 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.

Abbott was joined by Lt. Gov. Dan Patrick and House Speaker Dennis Bonnen, as well as the heads of both chambers’ tax-writing committees, in making the announcement. Their news conference followed the filing of two 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.”

Thursday’s bills would require voters to approve a tax rate that allows 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 whose potential property and sales tax collections are $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 to only 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 they lower 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 only limit 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.

School districts get the majority of their money from local property tax revenue, and the state pays for most of the rest. Under Thursday’s legislation, with local revenue growth slowed, the state would have to pay for more public education. But state leaders have not said where that money will come from.

And while lawmakers could provide more funding for education, there is no current mechanism for helping cities and counties with their budgets.

State Rep. Chris Turner, D-Grand Prairie, said in a statement that property taxes are so high because the state has relied on local taxes to fund education, instead of increasing its share of the cost.

“An arbitrary revenue cap, one that will also make it more difficult for local communities to fund public safety, is not going to solve this problem,” said Turner, who also chairs the Texas House Democratic Caucus.

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. State officials warned local leaders Thursday, though, that the chambers and the governor will be united this year. And, they said, local leaders should come to Austin armed with solutions – and not to just voice opposition.

“We ask you to come to the table and work with us on behalf of the taxpayers that we all represent, but you will not be dividing the House and the Senate and the governor on the solution,” Bonnen said. “So join us in finding the right solution because we’re already joined together.”

Sandlin worries that because the proposed revenue caps wouldn’t apply to smaller taxing entities, lawmakers who represent rural areas will more apt to support the bills. That could leave legislators from urban areas alone in a fight against the 2.5 percent threshold.

“It’s a bit of a divide-and-conquer strategy,” Sandlin said.

Bonnen called the unveiling of the legislation “the first step in solving the biggest problem facing Texas taxpayers.”

The state leaders were joined at the news conference by state Sen. Paul Bettencourt, R-Houston, the chairman of the new Senate Property Tax Committee, and state Rep. Dustin Burrows, R-Lubbock, the new chairman of the tax-writing House Ways and Means Committee. The participants traded some jokes as they rolled out the legislation, at one point musing that they should call it “HB 2.5” instead of HB 2 — a reference to the proposed rollback rate.

Sandlin didn’t find humor in the proposed 2.5 percent cap, though.

“It’s just draconian compared to prior versions,” he said.

Disclosure: The Texas Municipal League has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.

Authors: BRANDON FORMBYPATRICK SVITEK AND ALIYYA SWABY – The Texas Tribune

The 86th Legislature runs from Jan. 8 to May 27. From the state budget to health care to education policy — and the politics behind it all — we focus on what Texans need to know about the biennial legislative session.

MORE IN THIS SERIES 

City Council Approves FY 2019 Budget

On Tuesday, the City Council unanimously approved a $989.3 million budget for the Fiscal Year (FY) 2019 budget.

“The approved budget reflects continued efforts in balancing the present and future needs of the City,” said Mayor Dee Margo. “With the Council’s and city staff’s assistance, we will continue to provide for the level of services for public safety and streets that we have come to enjoy in our City while always respecting the taxpayer.”

The new budget is an increase of 3.99 cents per $100 property valuation, or $37.91 per year on a $100,000 home.

“This budget continues our efforts to offer a sustainable, balanced budget that effectively responds to needs of the City and commits resources to help us focus on streets, public safety, and quality of life in El Paso,” said City Manager Tommy Gonzalez. “It meets the needs of the growing city and further aligns our services with the priorities and expectations of City Council and the community.”

According to a news release from the city, the new budget continues to provide property tax relief for over 47,700 homes with Senior/Disabled exemptions. The annual savings is approximately $379 if you receive the general homestead and the over 65/disabled exemptions.

Included in the news release was a breakdown of specific areas that city officials say the increased tax revenue would be applied.

Streets

  • $7 million increase for 50 residential street maintenance projects
  • ADA on-demand request funding at $500,000 annually
  • More efficient pothole patching – 45,000 potholes per year

Public Safety

  • Pay raises for police officers and firefighters
  • Net increase of 87 new officers over the last three years (On October 1,, will be at the same level as 2010)
  • Implementation of the Crisis Intervention Team to assist with mental illness responses
  • Police, Fire, and 911 Communicator academies
  • Replacement of Fire Station #12
  • 150 new police vehicles on the street by August 2019; 150 by August 2019
  • 3 new firetrucks and 2 new ambulances

 

Quality of Life Projects

  • Park maintenance costs
  • Turf renovation program
  • Recent grand openings
  • Eastside sports complex
  • Asia Gateway and Endangered Species Carousel at the Zoo
  • Upcoming projects
    • Groundbreaking for Eastside Regional Park on August 23 – includes natatorium, diving well, recreation pool, and community center
    • 3 new recreation centers
    • Chihuahuan Desert at the Zoo

Senate Passes Property Tax Bill State Leaders Love, Local Officials Oppose

The Senate voted 18-12 in favor of bill that would require an election if a local government entity like a city or county wanted to increase some of its tax collections by 5 percent.

The Texas Senate on Tuesday approved a controversial bill that seeks to curb the growth in property taxes that local government agencies like cities and counties levy on landowners.

Senate Bill 2, which passed in an 18-12 vote, could require taxing entities to hold an election if the amount of operating and maintenance funds they plan to collect from property taxes is, in general, 5 percent more than what they took in the previous year.

State Sen. Paul Bettencourt’s bill has split scores of Texas homeowners and the local officials that they elect. Landowners and some government officials say the bill is needed to slow the increase in property tax bills they must pay every year.

Bettencourt, R-Houston, said from the Senate floor Tuesday that many homeowners are seeing increases of 8 percent to 10 percent in what they pay in property taxes each year. He said commercial property owners are repeatedly seeing 15 percent to 20 percent hikes.

“I for one don’t want to continue to climb the ladder above states like Illinois and New York,” Bettencourt said.

But many local and state officials say the Legislature is sidestepping the real issue that leads to rising tax bills: school districts levying more in property taxes because lawmakers won’t change the state’s system for funding education. State Sen. Lois Kolkhorst, R-Brenham, conceded that point on Tuesday.

“It’s a fine balance between respecting our local elected officials and having an understanding that we still have a lot of work to do,” she said.

Critics of the bill say it glosses over the fact that an election could be triggered when the actual tax rate remains flat because rising property values play a major role in calculating the election trigger. Many local officials also say the bill would threaten their ability to hire police officers, build new parks and fill potholes.

Many police and fire chiefs from across the state testified against the bill last week.

“What do I tell them?,” State Sen. Carlos Uresti, D-San Antonio, said Tuesday morning.

Because Texas has no state income tax, it relies heavily on sales and property taxes. The state and local entities split sales taxes. But only local entities receive property taxes. It’s unconstitutional for the state to levy property taxes, and state lawmakers don’t have the power to set those rates.

The current and proposed thresholds that could allow a rollback election aren’t based entirely on the actual tax rate, which is the amount per $100 of property value that a government entity levies against landowners. Instead, the formulas focus on how much total tax revenue a local entity receives from properties from one year to the next. So a city or county could hit the threshold for an election without changing its tax rate if there was a significant increase in local property values.

Currently, an 8 percent property tax increase or higher allows voters in a city or county to gather signatures to call for an election on the new rate. Bettencourt’s bill would lower that threshold to 5 percent and would require an automatic election.

State Rep. Dennis Bonnen, R-Angleton, has filed companion legislation, Texas House Bill 15, in the lower chamber. No hearing on that bill has been set. That bill has a lower rollback election threshold of 4 percent. That was the same threshold in Bettencourt’s original version of SB 2, but he increased it to 5 percent amid pushback during a Senate committee hearing last week.

Bill proponents say that the automatic election would allow for more local control because it puts more power in the hands of voters. Critics say voters can already oust elected officials for passing local budgets and tax rates they don’t like.

“Do you hold a referendum every time you make a big decision in your role as senator?” State Sen. Eddie Lucio Jr., D-Brownsville, asked Bettencourt on Tuesday.

State Sen. Kel Seliger, R-Amarillo, sought three amendments to the bill. All three were shot down 17-3 by the Senate. One of those amendments would have allowed residents to petition for a rollback election at the 5 percent threshold and only would have required an automatic election if a government entity hit the 8 percent threshold.

Lucio said that even though lawmakers can’t set property tax rates, they can “indirectly” influence them through unfunded mandates, which are constraints or requirements that they pass down to lower levels of government that don’t come with additional funding from the state.

Bettencourt said he’s often requested to see a budget that breaks down how much local governments spend on unfunded mandates from the state, but no one has ever produced one.

“I’m a big believer in what gets measured gets fixed,” Bettencourt said.

Lucio suggested an amendment that would have raised the election threshold to 8 percent during any biennium in which state lawmakers pass any unfunded mandates.

“This amendment will encourage us to take responsibility for our government spending,” Lucio said.

He withdrew the amendment after Bettencourt said he would not entertain it.

Read more of our related coverage:

  • Local governments and school districts battling the Texas Legislature over property taxes have a couple of things in common: They want local control over taxes and a more reliable partner in the state government.
  • Most Texans don’t know the state faces a tight budget, but asked what they’d do in a pinch, many of them say they’d dip into the state’s savings account, according to the latest University of Texas/Texas Tribune Poll.

Author:  BRANDON FORMBY – The Texas Tribune

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