Central Health leaders express concern over Texas Legislature’s proposed rollback tax rate

State lawmakers proposed a rollback property tax rate of 2.5 percent Jan. 31.

State lawmakers proposed a rollback property tax rate of 2.5 percent Jan. 31.

Board members of Travis County’s taxpayer-funded health care district, Central Health, set a budget and tax rate in fiscal year 2018-19 that allowed for 6 percent revenue growth. They also planned to do the same for the next fiscal year with the intention of slowing revenue growth to 4.5 percent each year after, said Lisa Owens, deputy chief financial officer of Central Health.

A new proposal from the Texas Legislature could change that by stipulating taxing entities that collect more than $15 million in revenue per year, such as Central Health, would have to hold an election to approve a tax rate that would increase the entity’s revenue by 2.5 percent or more from the previous fiscal year.

Several local government entities have said the proposal would be a detriment to their capacity to provide adequate services.

Board members echoed that concern after hearing a presentation Feb. 27 that outlined Central Health’s financial projections should the proposal become state law at the end of the current legislative session.

“This is one of the things I was fearful of when we were having the budget discussion before,” board member Cynthia Valdez said.

After five years, the gap between revenue generated with 2.5 percent revenue growth per year and 8 percent revenue growth per year, the current maximum growth allowed by law, would total $205 million, the presentation stated. Between 2.5 percent growth per year and 4.5 percent growth per year, the gap would be $75 million at the end of five years.

Under the current FY 2018-19 budget, property taxpayers paid an average of $343.97, according to the presentation. If Central Health had approved a rate that increased revenue by 2.5 percent instead of 6 percent, taxpayers would have paid $11 less on average, and Central Health’s total revenue would have been $5.8 million lower.

By FY 2022-23, Central Health’s projected uses are predicted to outpace its revenue if the 2.5 percent cap is maintained, the presentation stated.

Board member Sherri Greenberg said although it may be too early to tell how the state’s proposal will take shape, she thinks it will not remain at 8 percent after the conclusion of this legislative session.

“Reading the tea leaves, we know something will happen,” she said. “We just don’t know how much. I don’t think it’s going to be 2.5 percent, and I don’t think it’s going to be 8 percent.”
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By Emma Whalen

Emma is Community Impact Newspaper's Houston City Hall reporter. Previously, she covered health care and public education in Austin.


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