A Preview of the Property Tax Debate Ahead of the 87th Legislative Session

A Preview of the Property Tax Debate Ahead of the 87th Legislative Session

In a twist on the outdated adage, there are typically three assured extensively mentioned subjects in any given Texas legislative session: abortion, property taxes, and schooling.

Final session, the legislature spiked the proverbial soccer, declaring a “Super Bowl Session” over the modest, however not insignificant, property tax reform it secured in tandem with a bolstering of faculty funds.

Localities developed fairly a behavior of compressing out each ounce of property tax income they might as much as the eight p.c restrict.

Within the 85th Session, the physique tried and didn’t safe a halving of the restrict, however succeeded in 2019 dropping it even additional — reducing the p.c enhance threshold with out voter approval to 2.5 p.c for impartial college districts and three.5 p.c for cities and counties.

The legislature additionally “purchased down” college tax charges by injecting $5.1 billion from the state’s financial savings account into the college finance method.

In its wake, localities scrambled to implement a remaining property tax price hike as much as the expiring eight p.c restrict.

As destiny would have it, it was not the final up-to eight p.c enhance.

As soon as Governor Greg Abbott declared a statewide catastrophe as a consequence of coronavirus, he triggered a loophole inside Senate Invoice (SB) 2, the freshly minted laws, that raises the property tax enhance restrict again to eight p.c for an affected space in the course of the tax yr during which it occurred.

Cities and counties which match that invoice wouldn’t have to ask voters to approve a rise as much as eight p.c — and, being a statewide declaration, many have taken advantage therein.

The validity of the supply to this circumstance is disputed by state leaders, nevertheless, alleging the supply applies solely to “bodily” and never “financial” harm. The legislature’s intention definitely displays this, initially geared towards a scenario like Hurricane Harvey.

However the legislation doesn’t denote a bodily damage-only bent and thus units in a divide between the legislation’s intent and its textual content.

Operating parallel to the tax price facet is the appraisal facet of the equation, which often continues to rise unabated, thus growing tax payments for property homeowners.

All of it will set the stage for the property tax challenge writ giant going into the 87th Legislative Session when the legislature convenes in January. After the final session, legislators had been certain to emphasise that the work to be carried out on property taxes isn’t completed.

The query now turns into what reforms will make their method to the forefront of the dialogue come subsequent yr.

Absolutely, one thing aimed on the loophole will materialize. It’s attainable it’ll take the type of a repeal of the supply and even the insertion of a “bodily property harm” qualifier. However one other route has been floated by the 2 massive movers of SB 2 final session, Sen. Paul Bettencourt (R-Houston) and Rep. Dustin Burrows (R-Lubbock).

In June, they suggested a reprimand of cities and counties which used the loophole instantly by means of public strain by taxpayers. However one other risk might come by requiring a proportional lower in a locality’s tax collections the next yr.

Pointed at a unique challenge, however to an analogous finish, Abbott has suggested a property tax freeze on cities that “defund” their police departments. The verbal quarrel between Abbott and Austin Mayor Steve Adler has fed many a information headline for the reason that metropolis suggested, after which voted, to chop and redirect 1 / 4 of the police division’s funds earlier this yr.

The push got here in tandem with the nationwide unrest after the demise of George Floyd in Minneapolis. This yr, Austin’s faced substantial spikes in sure violent crime classes corresponding to homicide, assault, and rape — a phenomenon previous the town’s vote, however throughout a problematic APD staffing shortage.

Abbott’s risk was certainly meant as a shot throughout the bow, however its follow-through would show a severe punishment for cities that go that route.

With the invoice pre-filing interval already open, some property tax laws has already been filed.

One among state Rep. Valoree Swanson’s (R-Spring) payments would institute a voter turnout requirement for a political subdivision to implement a property tax enhance above the voter-approval price. For any enhance above that restrict to use, greater than 25 p.c of the entity’s voters should solid ballots within the election.

Whereas 25 p.c turnout isn’t laborious to surpass, it might come into play if a political subdivision opts for an off-year election, hoping particular teams particularly supportive of the measure can have an outsized affect on the outcomes. 

Rep. Andrew Murr (R-Junction), in the meantime, has proposed an elimination of faculty districts’ Upkeep & Operations (M&O) price. The M&O accounts for the overwhelming majority of the subdivision’s whole tax price and faculty districts account for the most important portion of a taxpayer’s invoice.

Murr’s laws would remove that part, by and huge used for basic fund-type bills, and set up a fee to navigate the change.

On the flip facet, Rep. James White’s (R-Hillister) laws appears to be like to determine a limitation much like that discovered inside SB 2 and HB 3, however as an alternative aimed toward value determinations. At present, appraisal year-to-year will increase are restricted to 10 p.c.

White hopes to contract that all the way down to 2.5 p.c — a considerable limitation on what quantities to, in lots of instances, runaway will increase in value determinations that don’t mirror the taxpayer’s skill to pay.

One other issue to look at is the brand new speaker, presumably Rep. Dade Phelan (R-Beaumont), and the way a lot emphasis he locations on the problem.

Property taxes will as soon as once more permeate deliberations below the pink dome, however as a result of emergence of assorted different priorities — not the least of which is the pandemic — on the backburner, it might be positioned.

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