Local officials concerned by SB 2 passage

By Lew K. Cohn

Managing Editor

The Highlander

Local county and school officials were less than pleased this week with the passage of a Texas Senate bill that caps the amount property taxes can be increased without requiring voter approval.

Senate Bill 2, which limits the amount of revenue local governments like cities, counties, school districts and special districts can raise before having to seek voter approval, was passed Monday, April 15, by an 18-12 vote, with state Sen. Dawn Buckingham, R-Lakeway, casting her vote in favor of the measure, which now moves to the junior chamber for approval.

“As a fighter for fiscally responsible limited government, I support low taxes, minimal government intrusion into our daily lives, and making sure government serves citizens, not the other way around. It is well known that our current property tax system too often places an undue burden on property owners. That is why I am proud to support Senate Bill 2, which has passed the Senate,” Buckingham said.

“In addition to providing residents of all taxing jurisdictions with an opportunity for a lower rollback rate, Senate Bill 2 includes requiring automatic rollback elections on the uniform election date, and prevents an appraisal review board from increasing an assessed value of their property during a protest hearing.”

Buckingham's support of Senate Bill 2 runs contrary to the positions of Burnet County Judge James Oakley and Burnet Consolidated Independent School District superintendent Keith McBurnett, whose jurisdictions collect a large percentage of property taxes locally.

“I think it’s unfortunate that some state leaders claim victory in achieving property tax reform when (1) school finance still includes recapture (Robin Hood) such that Burnet County property taxpayers are funding school districts in other parts of the state, and (2) there is no consideration for the state's unfunded mandates passed down to Texas’ counties,” Oakley said. “Programs like state mandated indigent health care and legal defense are among the top expenses to local taxpayers.

“I do like that SB 2 protects a person that is contesting their valuation from that act potentially backfiring on them. Otherwise, to claim victory in 'property tax reform,' the legislation should be more revolutionary in that it changes the way taxes are collected, such as a consumption tax.”

McBurnett said he is hopeful the Legislature can provide relief to Burnet CISD, which is projected to send $3.5 million back to the state next fiscal year for recapture under the school finance system if no changes take place in school finance reform.

Legislators are claiming school districts will see relief from House Bill 3, the massive education finance bill still up for consideration. But McBurnett is unsure whether the district will see enough relief from HB 3 not to feel the pangs of SB 2.

“I am more optimistic that I have been in years that the Legislature is going to make meaningful improvements to the school finance system,” McBurnett said. “While I have seen specific budget runs under proposed school finance legislation that increases funding for Burnet CISD, reduces the impact of recapture and lowers the district's tax rate, I have not seen the same level of specificity concerning the effects of SB 2 on Burnet CISD.

“My fear is that any gains made under new school finance legislation may be lost due to unintended consequences of SB 2.”

Authored by Senate Property Tax Committee Chair Paul Bettencourt, R-Houston, SB 2 would require county and city governments to automatically hold an election in November if they seek to collect an additional 3.5 percent or more in tax revenue (2.5 percent for school districts) from existing properties without regards to the total taxable values assigned to those properties.

The cap would not apply to newly developed property just added to the county tax rolls, nor would costs related to indigent healthcare and legal defense, per the bill. It also would not immediately impact any jurisdiction with less than $15 million in annual collections, but would require a May 2020 election asking voters if they wanted to opt into the cap.

Current law allows local governments to increase their tax revenue by eight percent on existing property before becoming subject to a “rollback” election. Such an election is not automatically triggered; voters must collect enough petitions to force the issue to a ballot.

Other provisions in the bill include creating an online portal to allow property owners to search for their address and see statistics relating to property value, number and names of entities levying taxes and tax rate growth. The bill would also require enhanced public posting requirements for tax hearings and counties would have to dedicate an employee to making sure local taxing jurisdictions comply with SB 2 requirements.

The bill changes the name “effective tax rate” to “no-new-revenue rate” and the term “rollback rate” to “voter-approved rate.” An effective rate is one at which an entity would earn the exact same amount of revenue as in the previous year.

Other reforms in the bill affect the appraisal appeal process in which homeowners may protest the appraised value of their home before a review board. Hearings would be required to take place at convenient times and would have to be conducted using a uniform process applicable to all appraisal districts. Also, appraisal districts would be prohibited from penalizing an appellant by raising his or her appraised value against the property owner's wishes.

The bill was being pushed in response to a promise by Gov. Greg Abbott, Lt. Gov. Dan Patrick and House Speaker Dennis Bonnen to slow property tax increases and cap spending.

“With the attention on many, many appraisal reforms as well, I believe that this is a balanced package," said Bettencourt. "It looks at the needs of rural Texas, as well as urban. More importantly, it looks at the needs of taxpayers all across the state."

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