Wednesday, November 30, 2016 by Elizabeth Pagano

Legislature makes tax caps a priority, cities respond

Well-worn battle lines between the city and state were retraced Tuesday, as the Texas Legislature made it clear that it would be making property tax caps a priority this session. The response from area cities was just as clear.

Sen. Paul Bettencourt (R-Houston) framed the unveiling of SB-2 (and the accompanying committee report) as a response to an “overwhelming cry for property tax reform.”

“Texas taxpayers have been facing property tax bills that are increasing 2.5 to 3 times faster than median household income,” said Bettencourt, who chairs the Senate Select Committee on Property Tax Reform and Relief. “Throughout Texas, in hearing after hearing, the Select Committee heard the same message loud and clear: Texans are asking for and deserve property tax relief.”

Bettencourt explained that home appraisals in the state have skyrocketed – rising 12 percent each year for the past three years in Austin, for example – and the ensuing tax burden was referenced during the eight hearings the committee has held over the past year.

In a press release about the proposal, Bettencourt pointed out that county tax levies have increased 82 percent and city tax levies have increased 71 percent over the past decade (from 2005 to 2015), but household median incomes increased only 32 percent over that same time period.

His proposal, dubbed “The Property Tax Reform & Relief Act of 2017,” would most prominently lower the rollback tax rate from 8 percent to 4 percent. It would also create a board to oversee the property tax process in the state, standardize the appraisal system and prohibit local governments from challenging the value of an entire class of properties, like Austin did recently, among other things.

As they have in the past, San Antonio, Austin, San Marcos and New Braunfels stood united against the proposed changes. A statement from the “Coalition of I-35 Corridor Mayors” said unequivocally that it would “harm Texas cities,” citing a combined fiscal loss of $770 million in tax revenue over the past decade.

Austin Mayor Steve Adler issued his own statement about the change, which would reduce property taxes by $32.31 each year for the average Austin homeowner and result in a $15.4 million cut to the city budget.

“We should not risk police, fire fighting, EMS, parks, safety nets and transportation projects – all to save Austin homeowners only $2.69 a month. It’s risky and not real tax relief,” he said. “If the legislature really wants to help local taxpayers, it should better fund education because that’s most of the Austin property tax bill.”

The Texas Municipal League echoed Adler’s sentiments in a press release of its own.

“Cities are not the cause of high property taxes in Texas,” Executive Director Bennett Sandlin explained. “Cities get only 16 percent of the property taxes paid by Texans while 55 percent is levied by school districts. Legislators don’t want to deal with the real cause of high property taxes – the school finance system – because the legislature depends on rising school property taxes to balance the state budget. Under the ‘Robin Hood’ funding scheme, 230 school districts are forced to send part of their property taxes to the state treasury this year.”

In addition, the I-35 coalition questioned the figures presented by the committee and Bettencourt. Its statement said, “The committee has stated that city property taxes are increasing by making an inaccurate comparison between median household income, which increases due to inflation and total property tax collections, which have increased mostly due to new construction.

“There is no statistical relationship between median household income and property tax collections. The total amount of property taxes levied by Texas cities only increased 19 percent from 2009 to 2014. During this time period, state revenues increased by 46 percent, according to the Texas Comptroller.”

The Texas Senate will address the bill during its 85th Legislative Session, which starts Jan. 10. Only one bill – the state budget – was given a higher priority by Lt. Gov. Dan Patrick.

Photo by Daniel Mayer (Own work) [GFDL, CC-BY-SA-3.0 or CC BY-SA 2.5-2.0-1.0], via Wikimedia Commons.

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Key Players & Topics In This Article

budget: Income and expenditure for a set period of time.

property tax appraisal: The value of property as determined for use in assessing area property taxes.

tax rate: Tax imposed by the federal, state and local government.

Texas Legislature: The state’s legislative governing body composed of the House and Senate.

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