AUSTIN (KXAN) — Within hours of filing a bill that looks at reducing the tax burden on property owners in Texas, numerous mayors voiced their concerns about how the potential cuts will impact city services.
Senator Paul Bettencourt, R-Houston, filed Senate Bill 2 (SB2 – the Property Tax Reform & Relief Act of 2017), which includes substantial changes to local appraisal district oversight. The bill came forth after the Select Committee was charged by Lt. Governor Dan Patrick to find ways to improve the property tax process. Over the past year, the group held hearings across the state and 321 witnesses testified, according to the committee’s interim report.
“Fifty hours of public testimony has never been taken before in this manner, but the need for property tax relief is clear to Texas taxpayers that see their property tax bills rising faster than their paychecks year after year,” said Bettencourt.
The Select Committee, using data from the Comptroller, determined that city and county property tax levies have increased twice as fast as median household incomes since 2005. Much of the discussion circled around what can be considered a tax increase. One homeowner testified that an increased appraisal is in effect, a tax increase.
“Local taxing entities often deflect taxpayers who are upset about rising bills by telling them that the tax rate has remain unchanged, the increase in their tax bill is due entirely to the increase in their appraised value, and they should speak to the appraisal district about their value,” according to the report.
One of the biggest items of contention: the rollback tax. The rollback tax rate is calculated to allow Maintenance and Operations tax revenues to grow by up to 8 percent each year from the prior year. This also limits how much property tax revenue can increase before voters can petition to keep their taxes from increasing by 8 percent. The report found that “major obstacles exist for taxpayers to effectively trigger a rollback election.” The committee wants the Legislature to consider reducing the 8 percent limit to 4 percent or lower.
The lowering of the rollback tax is what city officials are having a problem with. Austin Mayor Steve Adler says a 4 percent cap would “limit the City of Austin’s ability to fund essential city services.” According to the city of Austin, the proposal would result in a tax cut of $2.69 for the average homeowner in Austin but it will cut $15.4 million from 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,” said Adler in a press release. “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 city says city property taxes only make up about 20 percent of the overall Austin property tax bill.
The Coalition of I-35 Corridor Mayors is also opposed to the proposal.
“Texas cities are the economic engines of our state and are the level of government closest and most accountable to the people,” said San Antonio Mayor Ivy R. Taylor in a release. “City officials best understand the unique facets of their communities and should continue to have the ability to manage their budgets responsibly to provide critical services.
The committee is also suggesting local appraisal districts appraisal review boards, whether by a panel or the whole board, only require a majority vote and not a unanimous vote. In order to make the dispute process easier for homeowners, the committee is also suggesting that review boards hold weekend and evening hearings.
The Senate is expected to take this issue up during the next Legislative Session staring Jan. 10, 2017.