AUSTIN, Texas – Gov. Greg Abbott said the state is looking to roll back the ability for cities and counties to raise property tax rates to fund disaster recovery.
Senate Bill 10 seeks to limit the growth of property tax rates after a disaster. One expert argues, however, the bill fails to meaningfully reform the process because it is written too loosely.
If passed, local governments could calculate two voter-approval rates after a disaster is declared by the president or governor: the current formula and an additional, new formula.
KSAT first reported on the bill last week and noted the bill leaves an important part of the formula undefined.
One of the bill’s co-authors, state Sen. Donna Campbell, R-New Braunfels, confirmed through her office that no definition of the disaster relief rate exists.
UTSA political science professor Jon Taylor said this leaves how this rate is determined up to local governments.
“We don’t know,” Taylor said about how it will be calculated. “(It) means a roll of the dice in some respects on how much money they may actually get in terms of disaster relief.”
The bill would require governments to use the lesser of the old and new formulas and could still choose to approve a tax rate lower than the number the formulas calculate.
However, the ambiguity of the bill also means governments could raise rates as high as allowed under the current tax code.
“The easiest way to do this would be to basically create specific definitions about what is in the formula,” Taylor said.
Rural areas especially harmed by changes, expert says
Changes in the disaster provision of the tax code are part of a larger property tax reform bill being pushed by Republicans.
“There’s been this push to try to reduce property taxes whenever possible,” Taylor said.
The state House version of the bill, which the state Senate rejected, would bring the maximum property tax growth rate allowed every year from 3.5% down to a 1% growth rate.
If the House version passes, that means the state’s maximum property tax growth rates dropped from 8% to 1% in a matter of just six years.
“There will likely not be enough money to cover the costs of local government,” Taylor said. “In smaller, rural counties, (property taxes) fund essential services: emergency management, police and fire, infrastructure.”
The Senate bill version would also drop potential rate growth but only to 2.5%.
Taylor said these changes, no matter how small they may seem, could have devastating impacts to small communities.
Kerrville City Manager Dalton Rice said during a budget workshop that potential changes in the legislature are unsustainable.
Meanwhile, Kerr County Judge Rob Kelly expressed fear the county could become insolvent if it keeps using a no-new-revenue rate.
“I think they’re right to be fearful of insolvency,” Taylor said.
Taylor said limiting taxes is part of a long-term Republican strategy to shrink government, led by Lt. Gov. Dan Patrick and state Sen. Paul Bettencourt, R-Houston.
“Their aim is to minimize the size of government whatsoever,” Taylor said. “The ultimate goal, I think, is to eventually eliminate property taxes.”
This could force governments to cut services or outsource them to private companies.
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