EXPLAINED: How will the proposed property tax bill affect Texas taxpayers?

Updated 9:02 a.m. March 15

Tuesday featured a lot of action in the Texas Legislature, including the first public hearing on Senate Bill 2, a proposal by state Sen. Paul Bettencourt, R-Houston, that aims to provide property tax relief and reform.

Early Wednesday morning, the Senate Finance Committee voted the bill out of committee in a 9-5 split with a significant amendment that partially changed the fabric of the bill. The amendment was offered by state Sen. Joan Huffman, R-Houston.

Those voting against the bill include Sen. Royce West, D-Dallas, Sen. Kel Seliger, R-Amarillo, Sen. Carlos Uresti, D-San Antonio, Sen. Kirk Watson, D-Austin, and Sen. Juan Hinojosa, D-McAllen.

Seliger was skeptical of the bill throughout the hearing because of its nature to preempt local decisions on property taxes.

The hearing has been full of data and jargon, so here are answers to the many questions brought about by this bill:

What does the bill do?

In its initial form, SB 2 would lower the rollback tax rate from its current cap of 8 percent to 4 percent. This would allow property taxes to increase by no more than 4 percent from year to year, unless a special election would be called. As it stands now, a rollback election would only be triggered when a tax rate exceeds 8 percent and would also require a petition to be signed for such an election.

However, Huffman's amendment changed the proposed 4 percent threshold to 5 percent, with the hope that this extra percentage point would still enable cities and political jurisdictions to carry out services for citizens.

"I think that the testimony that we heard today was very impactful, I think we heard from constituents from all over the state...I think that's a nice middle ground," Huffman said.

The bill's sponsor, Bettencourt, noted the rollback rate was capped at 5 percent in 1979, during a period of high inflation, but with a changing economy, the rate was raised to 8 percent.

In the amendment process, another member of the Finance Committee, state Sen. Kelly Hancock, R-North Richland Hills, noted that it was time to return the rollback rate to its original form.

The bill would also mandate that any city or jurisdiction that would raise the rate must hold an election on a general election date. The bill would also create a Property Tax Advisory Board under the Texas Comptroller.

Why did Bettencourt author the bill?

Bettencourt chaired the Senate Select Committee on Property Tax Reform and Relief over the interim session. He, along with the committee, visited seven cities and heard more than 50 hours of testimony on Texas' rising property taxes.

Bettencourt said property tax bills have increased by 36 percent within Harris County in the past three years. In addition, property tax appraisals have risen more than 22 percent in Dallas-Fort Worth, 20 percent in San Antonio and 12 percent in Austin over three years, according to Bettencourt.

Who supports the bill?

Bettencourt is joined by five other co-authors, all Republican senators. Members of the business community, including the Texas Building Owners and Managers Association and the Texas Association of Manufacturers.

At the public hearing, Catherine Morse, general counsel for Samsung Austin Semiconductor, said the company supports SB 2 because it would provide a business friendly environment. Morse said her company is the largest property taxpayer in Travis County and understands that without changes to property tax law, incentivizing big business to settle in Texas could be a challenge.

Here is a list of some of the interests who voiced support for the bill at the hearing:

  • Texas Taxpayers and Research Association

  • Samsung Austin Semiconductor

  • Austin City Council Member Ellen Troxclair (not indicative of city of Austin's opinion)

  • Cheryl Johnson, tax assessor-collector of Galveston County

  • Texas Building Owners and Managers Association

  • Texas Association of Manufacturers

  • Collin County

Who opposes the legislation?

Overall, cities and law enforcement have been largely against this kind of property tax reform. In November, the Texas Municipal League denounced Bettencourt's interim committee recommendations.

"The largest budget item for every city in Texas is public safety—police, fire fighting and emergency medical services,” said Bennett Sandlin, executive director of the Texas Municipal League.  “Politicians can’t proclaim their support for first responders and then turn around and vote to restrict the funding that pays for the salaries, equipment, vehicles, health insurance and pensions of the men and women who protect our communities."

Since the hearing started, the mayors of Dallas and Fort Worth have testified against the bill, saying it would not create the relief taxpayers truly want and that it would restrict the ability of cities to expand services alongside growing populations.

Sen. John Whitmire, D-Houston, echoed similar concerns, saying Bettencourt has not thought of how cities can cope with burgeoning populations.

"Why do you continue to attack local governments?" Whitmire said. "What would you tell them to do?"

Senators Joan Huffman, R-Houston, and Kel Seliger, R-Amarillo, have also raised concerns about superseding local control.

Here is a list of some of the interests who voiced opposition to the bill at the hearing:

  • The city of Dallas

  • The city of Fort Worth

  • San Antonio Police Department

  • The city of Frisco

  • The city of Grapevine

  • The city of Houston

  • The city of Denton

  • Texas Conference of Urban Counties

  • Center for Public Policy Priorities

What is next for the bill?

After the bill was voted out of committee, some Senate Finance Committee members indicated a further desire to work through additional amendments. The bill will face debate on the Senate floor, voting and if approved, the same process in the House.

Click here for more of Community Impact Newspaper's coverage on property tax relief.


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