Texas Legislature Calls Special Session Regarding Property Tax Reform
Saying there needs to be more transparency in how property taxes are assessed in Texas, the head of the House Ways and Means Committee unveiled legislation that would reduce the maximum increase allowed in taxes on individual properties.
House Bill 15, dubbed the “Property Taxpayer Empowerment Act” and authored by state Rep. Dennis Bonnen, R-Angleton, would reduce the maximum increase in taxes for a property — from 8 percent to 4 percent. The legislation would also require local governments to annually publish a “No New Taxes Rate" — which is the rate that would raise the same amount of money as the previous year — and restrict debt service taxes to debt that has been approved by voters.
While rates are often kept the same, climbing property values in Texas are rising, leading to higher tax bills for Texas property owners.
According to the Austin Statesman, state lawmakers will return to the Capitol for a special session in July to tackle property tax reform, a legislative priority for Lt. Gov. Dan Patrick that was stymied in the House during the regular session.
“Texans pay the sixth-highest property tax in the nation and Texans have told us loud and clear that common-sense property tax reform legislation is long overdue,” Patrick said in a statement in November after Sen. Paul Bettencourt, R-Houston, filed Senate Bill 2, which limits property tax increasesto less than 5 percent before a rollback election is automatically triggered.
“Property taxes are driving people out of their homes and hampering business expansion and growth,” Patrick said. “It’s time for this to stop.”
The Senate passed the bill 18-12 in March. The House excluded the automatic rollback election provision in its version of the proposal.
Critics argue it handicaps local governments’ ability to fund public services and does little to cut property taxes as it doesn’t include school districts, which account for a majority of a Texas homeowner’s tax bill.
“(School finance is) where you have to start if you want real property tax relief,” Rep. Tony Dale, R-Cedar Park, said.
Dale said House Bill 21 would have provided an additional $1.6 billion into school funding, increasing the basic allotment to $5,350 per student. The bill didn’t receive the Senate’s backing.
“That was our attempt to help school funding and add property tax relief,” Dale said.
More than half of Texas counties have passed resolutions opposing the bill, and the mayors of Austin, San Antonio, San Marcos and New Braunfels issued a joint statement attacking the plan, saying it would save their taxpayers little but would result in significant cuts to city services.
Under existing law, local governments may raise effective tax rates (the rate needed to raise the same total amount of taxes from the same local properties as the year before) up to 8 percent before residents can petition for a rollback election. Senate Bill 2 would automatically trigger a rollback election when a local government, except for school districts, increase the effective tax rate by 5 percent or more.
“It’s complex but it needs to be addressed and that is the incredible rise in property taxes in this state. I can feel the groans,” Gov. Greg Abbott told Bell County Republicans during a speech earlier this month.
“People are being priced out of their homes,” he said. “It turns out you’re not owning your own property and there needs to be a solution. But it seems like at least a starting place, and maybe the best way to solve it, is to for those who pay the property taxes, let them have a say on what those property taxes will be. Give them a vote on their own property taxes.”
Smithville City Manager Robert Tamble and Bastrop Mayor Connie Schroeder said city taxes in each jurisdiction represent about 20 percent of taxes levied across the county, while schools account for about 55 percent of all property tax bills statewide.
“City property taxes are used to fund community services like fire, police, street repair, and drainage improvement,” Tamble said. “…The city estimates this legislation will place an unnecessary financial burden in the amount of $8,000 per election if/when an ad valorem tax increase is needed that exceeds the 5 percent limit.
“These funds are not allocated in our budget and our city will be forced to either find a new revenue source to cover the cost of a mandated election, or more likely, streamline an already tight budget and cut necessary services to our community," Schroeder said.
“It seems the main point of Senate Bill 2 is to provide a distraction from addressing the real issue when it comes to high property taxes for Texas citizens - funding public education,” she said.
“You can never anticipate when there will be a terrible disaster in the community,” Pape said. “We (out) of 254 counties in Texas know better than anybody that when it happens, you need to be able to raise the funds to provide the services that your citizens need and deserve.”
The Texas Municipal League, which advocates the interests of and lobbies for cities, said SB 2 is an assault on public safety. “Legislators can’t proclaim that they support law enforcement officers if they vote to restrict the source of funding that pays for salaries, equipment, vehicles, technology, health insurance and pensions of the men and women who protect our citizens. A vote for S.B. 2 is a vote against law enforcement,” the group said in a talking points memo.
Rep. Celia Israel, D-Pflugerville, said changing the rollback process for tax increases equates to the state telling cities how to do their jobs. She said legislators were unable to find consensus on the matter during the regular session and doubts it’ll change during the special session, which begins July 18.
“I don’t understand the practicality of taking on property taxes and cities in 30 days when we couldn’t find a solution in 140 days,” she said.
Dale said every member who served during the regular session is returning to Austin for the special session and the likelihood of them changing their minds is low.
*Portions of this article were curated from texastribune.org and statesman.com