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Texas Senate votes to limit city and county property tax increases


Highlights

The Senate voted 18-12 for a bill forcing property tax hikes of 5 percent or more to be approved by voters.

Local governments oppose the bill, saying they often raise taxes due to “unfunded mandates” from the state.

State Rep. Dennis Bonnen has sponsored similar legislation in the House.

The Texas Senate on Tuesday voted 18-12 to approve a bill that would trigger an automatic referendum if a city or county raises property taxes by 5 percent or more.

Currently, a tax ratification election only takes place if local governments raise taxes 8 percent or more and if taxpayers petition to force the referendum.

State Sen. Paul Bettencourt, R-Houston, who authored Senate Bill 2, drummed up support for the measure, a top priority of Lt. Gov. Dan Patrick, by holding a series of public hearings across the state leading up to the legislative session to air complaints from property taxpayers ranging from big businesses to low-income families.

“When you have both taxpayers in the neediest portion of society as well as the largest taxpayers of the state having problems with tax relief, we need action,” Bettencourt said on the Senate floor Tuesday. “Given the magnitude of property tax increases, we need real reform now.”

Democrats, joined by city and county officials, fiercely oppose Bettencourt’s bill, saying that it would tie the hands of the local elected representatives who know their communities best and that property tax increases are often the result of “unfunded mandates” from the state, such as demands on courts and prosecutor’s offices adopted by state lawmakers.

The bill is necessary, Bettencourt has argued, because local property tax burdens have risen faster than Texans’ incomes. Bettencourt, however, used questionable math to back up that claim by comparing a statewide measure of taxes to a measure of individual income, making it appear that tax burdens have far outstripped incomes in recent years. Apples-to-apples comparisons show they have risen at roughly the same rate.

Bettencourt on Thursday disputed that criticism and provided a packet of information. The first graph in that packet, however, again compares the income of the median Texas household to the statewide total of tax levies.

Bettencourt said an apples-to-apples comparison nonetheless shows that property taxes have grown faster than income, pointing to another graph that combines Texas data for taxes and federal data for income. While other analyses using federal data for both categories showed incomes and taxes rising in concert, Bettencourt’s combination of state and federal data showed property taxes rising by 33.7 percent from 2010 to 2015, when incomes went up only 13.9 percent.

The federal tax data is “faulty,” he said. “We’re using the reliable Texas data on the property tax increase.”

In Texas, with no state income tax, the state government relies primarily on the 6.25 percent sales tax, while counties and school districts run almost entirely on property taxes. Cities use a blend of sales and property tax revenue.

If adopted, the bill’s impact on property owners will be limited because its main provisions don’t affect school districts, which account for a majority of property tax levies in Texas.

Among the bill’s critics were state Sen. Kirk Watson, D-Austin, who said that, because cities and counties spend most of their money on policing and courts, the bill would do more to hurt public safety than it would to cut taxes. If lawmakers wanted to lower property taxes, he said, they should spend more money on schools, alleviating the burden on districts.

“The Legislature is the real culprit on rising property tax bills,” he said.

Every Democrat voted against the bill. The only Republican to oppose it was state Sen. Kel Seliger of Amarillo. State Sen. Donna Campbell, R-New Braunfels, was absent due to a death in the family.

The Center for Public Policy Priorities, a left-leaning Austin-based think tank, said the bill amounted to “playing with fire.”

“This dangerous proposal is an affront to the hundreds of firefighters, police officers and other first responders — along with mayors, county judges and others — who oppose the bill,” said Dick Lavine, a revenue analyst for the group.

Bettencourt initially proposed a 4 percent property tax increase as the “rollback rate” for the automatic tax referendums but raised it to 5 percent when the bill was being considered by the Finance Committee, which approved it in a 9-5 party-line vote.

State Rep. Dennis Bonnen, an Angleton Republican who chairs the tax-writing Ways and Means Committee, has filed a similar bill in the House.



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