Legislature, cities clash on tax hikes

Se­nate bill would have reined in Austin’s prop­erty tax in­creases.

Austin American-Statesman - - FRONT PAGE - By Sean Collins Walsh scwalsh@statesman.com

Leg­is­la­tion ap­proved by the Texas Se­nate this sum­mer de­signed to rein in lo­cal prop­erty tax in­creases would have done just that for Austin home­own­ers.

The Austin City Coun­cil has raised prop­erty taxes by more than 4 per­cent — above which Se­nate Bill 1 would force cities and coun­ties to seek voter ap­proval to hike taxes — in four out of the last five years.

Un­der the House ver­sion of the bill, which sets the so-called roll­back rate at 6 per­cent above cur­rent tax­ing lev­els, Austin would only have gone past the limit once in the last half-decade. But the pro­posed Austin bud­get for the fis­cal year start­ing Oct. 1, un­veiled Wed­nes­day, calls for an 8 per­cent in­crease in prop­erty tax rev­enue, the max­i­mum cur­rently al­lowed with­out po­ten­tially trig­ger­ing a roll­back elec­tion.

The pic­ture is dif­fer­ent among area county gov­ern­ments, how­ever. Over the last five years, the three most pop­u­lous coun­ties in Cen­tral Texas have rarely ex­ceeded the Se­nate’s pro­posed 4 per­cent limit and just once ex­ceeded the 6 per­cent limit.

Gov. Greg Abbott has pro­moted the idea of rein­ing in prop­erty tax hikes as his No. 1 pri­or­ity for the spe­cial ses­sion.

The show­down over prop­erty

tax leg­is­la­tion, one of the most hotly con­tested items in the spe­cial ses­sion, has pit­ted lo­cal gov­ern­ment of­fi­cials from both par­ties against con­ser­va­tive Repub­li­cans in the Legislature.

‘Cry­ing out for re­lief ’

Repub­li­can Lt. Gov. Dan Patrick and Sen. Paul Bet­ten­court, R-Hous­ton, have led the charge to re­strict cities’ and coun­ties’ abil­ity to raise taxes with­out voter ap­proval, ar­gu­ing that prop­erty taxes have gone up faster than res­i­dents’ abil­ity to pay them and sin­gling out ju­ris­dic­tions they have deemed to be too tax-hun­gry.

“Prop­erty tax­pay­ers are cry­ing out for re­lief,” he said. “The pub­lic knows that if there’s a case that’s made from elected of­fi­cials that we should spend more of their hard-earned money, they’ll vote for it. But if there’s not such a case, there should be pro­tec­tion.”

City and county of­fi­cials and Democrats, how­ever, point out that a ma­jor­ity of the prop­erty taxes Tex­ans pay go to school dis­tricts, which aren’t in­cluded in the Bet­ten­court bill.

Dur­ing the reg­u­lar ses­sion, the Se­nate ap­proved an au­to­matic tax elec­tion trig­ger of 5 per­cent. The House wa­tered it down by re­mov­ing the roll­back pro­vi­sions. Nei­ther ver­sion be­came law.

The Se­nate has al­ready ap­proved the 4 per­cent limit dur­ing the spe­cial ses­sion that be­gan July 18. A House com­mit­tee ap­proved the 6 per­cent roll­back rate, but it hasn’t come up for de­bate be­fore the full House.

The com­mit­tee pas­sage makes it more likely that the bill will be­come law, but there re­mains sig­nif­i­cant op­po­si­tion in the House from Democrats and some Repub­li­cans who rep­re­sent ru­ral dis­tricts.

Lo­cal con­cerns

For lo­cal of­fi­cials, prop­erty tax de­ci­sions are rarely about sweep­ing pol­icy ob­jec­tives or ide­olo­gies. Each tax in­crease or cut has a story be­hind it, and each ju­ris­dic­tion has dif­fer­ent fac­tors to weigh.

Austin lead­ers, for ex­am­ple, have lit­tle con­trol over most of the city’s ma­jor rev­enue streams and use prop­erty taxes, which con­trib­ute about 40 per­cent of its fund­ing, to plug holes in the bud­get, said Ed Van Eenoo, the city’s deputy chief fi­nan­cial of­fi­cer.

The City Coun­cil can­not in­crease its rate for lo­cal sales taxes, a com­par­a­tively er­ratic source of fund­ing, nor can it eas­ily change how much money comes from the city’s util­i­ties or from de­vel­op­ment fees.

When those other rev­enue streams de­crease or slow down, as is the case now, the city’s ex­penses, which are driven by la­bor, don’t stop ris­ing. “All of these other ways that the city funds it­self, most of them, if not all of them, are grow­ing less than our per­son­nel costs,” Van Eenoo said.

“I don’t think (law­mak­ers) re­ally un­der­stand how city bud­gets are con­structed and how im­por­tant the prop­erty tax is as a source of rev­enue to bal­ance out our ex­pen­di­tures,” he said. “This isn’t about ex­pand­ing gov­ern­ment. This isn’t about new ser­vices or pro­grams. This is about keep­ing pace with a grow­ing city.”

Even of­fi­cials from ju­ris­dic­tions that haven’t run afoul of the bill’s pro­posed lim­its have con­cerns. Bet­ten­court has praised Travis County for hav­ing the most mod­er­ate tax in­creases among large Texas coun­ties in re­cent years, a rare en­dorse­ment from the wing of the GOP that usu­ally uses the Austin area as a rhetor­i­cal piñata.

“Travis County is by far, as best we can tell, best in class, cer­tainly of the ur­ban coun­ties,” Bet­ten­court told the Amer­i­can-Statesman.

Travis County Judge Sarah Eck­hardt said that she and the county com­mis­sion­ers have been able to keep tax in­creases low be­cause of the county’s am­ple re­serves and flex­i­bil­ity with prop­erty taxes.

If Se­nate Bill 1 had been in ef­fect, she said, they might not have left the rate low while tap­ping the re­serves be­cause they wouldn’t have the flex­i­bil­ity to raise taxes if money was short in the fu­ture and the re­serves had been used up.

“We have a well-cal­i­brated bal­ance be­tween our flex­i­bil­ity in tax rate and flex­i­bil­ity in re­serves. If they take away our flex­i­bil­ity in tax rate, then we will make it up in our flex­i­bil­ity in re­serves,” she said, by stock­pil­ing cash. “We prob­a­bly would not have re­duced the tax rate so sig­nif­i­cantly ... if we could not be sure we would be able to re­gain that flex­i­bil­ity in the fu­ture. It cre­ates a dis­in­cen­tive for gov­ern­ment to ratchet down its tax rate in times of pros­per­ity.”


Prop­erty own­ers check in at the Travis County Ap­praisal District of­fice in May. The Austin City Coun­cil has raised prop­erty taxes by more than 4 per­cent — above which Se­nate Bill 1 would force cities and coun­ties to seek voter ap­proval to hike taxes — in four out of the last five years.

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