Proposal to limit taxes gets early OK

AUSTIN — A major property tax reform bill that proposes to diminish city and county government coffers while reining in homeowners’ tax bills is heading to the state Senate for a vote.

Gov. Greg Abbott and the state’s Republican leaders have made property taxes and boosting funding for schools top priorities, but the latter is moving at a much slower pace. All four Republicans on the five-member Senate property tax committee voted to advance the property tax bill Monday, less than a week after a lengthy hearing in which city officials warned that the change would hamper their ability to pay for police and fire protection.

Under the proposal — known as SB 2 — voters would need to approve a property tax increase over 2.5 percent for cities, counties or school districts. The change would result in an estimated $1.1 billion in revenue loss for Texas counties, and $1.2 billion in revenue loss to city governments by 2024, according to the bill’s fiscal note. The bill next will go to a vote of the full Senate. The House has yet to have a hearing on the bill.

State lawmakers have pledged to boost their investment in education, in part to offset losses in property tax revenue for local school districts. But where that money would come from remains to be seen.

“I think maybe we’re putting the cart before the horse,” said Sen. Chuy Hinojosa of McAllen, the property tax committee’s lone Democrat.

But state Sen. Kelly Hancock, R-North Richland Hills, said it’s clear that state leaders are committed to bolstering education funding.

“There’s every intention within the state to make sure we put billions of additional revenue into that,” he said.

The proposal includes a “complete overhaul” of the appraisal process, said Sen. Paul Bettencourt, R-Houston, one of its chief architects.

Bettencourt said he does not plan to ask senators to vote on the full bill this week, adding that he wanted to give lawmakers time to take up related school finance legislation.

The bill, which has elements aimed largely at about 100 municipalities, advanced Monday with some changes. Now, property owners in smaller municipalities could vote to opt in, a request Bettencourt said he heard from residents of those smaller cities and counties. Local governments with less than $15 million in annual property and sales tax collections combined were initially exempt from the bill’s revenue caps.