Local Government Expect a Pinch After Texas Caps Property Taxes

In June, Texas Governor Greg Abbott signed SB 2, "an expansive reform measure meant to slow the growth of Texans’ property tax bills, long a priority issue for GOP state leaders," according to an article by Riane Roldan and Shannon Najmabadi.

Included in the bill's reforms: a requirement that tax rates and other information be posted in an online database as well as a "controversial provision that requires many cities, counties and other taxing units to hold an election if they wish to raise 3.5% more property tax revenue than the previous year."

Local governments opposed the bill, for the effect the bill would likely have on their municipal finances. "Moody’s Investors Service, a credit-rating agency, issued a May analysis that said the law would lead to 'minimal' homeowner savings and 'hurt local governments substantially.'"

Texas Republicans paired the property tax reforms in SB 2 with school finance reform that also lowered property tax bills by $5.1 billion, according to the article. Ed Emmett recently penned an opinion piece, several weeks after the bill signing, criticizing the arguments made by Texas republicans in support of the property tax reforms. According to Emmett, property taxes in the state are far from fixed, and tax consultants are more likely to benefit from the law than property owners.

Emmett claims that these two bills are a result of the State Legislature's continued negotiation of the boundaries of its authority and responsibility relative to that of the many local governments that make up the large state of Texas:

At its core, SB 2 continues state leaders’ war against local governments. For years local governments have had to make up for the state’s underfunding of public education. But the state’s top elected officials, Gov. Greg Abbott and Lt. Gov. Dan Patrick, didn’t want the public to understand that those state budget decisions were the main reason property taxes were going up. So they criticized city and county policies.

Emmett lists the well known negative consequences of property tax limits, without actually using the words "California" or "Prop 13." Governor Abbott has in the past used California as an example of what not to do with regard to local control—in this case, however, the governor seems determined to follow in California's footsteps.