Senate Bill 2-era funding challenges loom over Richardson's budget talks

Image description
A tale of two cities
The city of Richardson’s budget is still one fiscal year away from bearing the brunt of Senate Bill 2, but conversations around how to dull its impact are already in full swing.

SB 2, signed into law by Gov. Greg Abbott on June 12, limits funding for municipalities by requiring voters to sign off on property tax revenue growth exceeding 3.5%. Prior to SB 2, cities could budget up to 8% property tax growth for operational costs, above which voters had to petition for an election to roll back the increase.

Cities across Texas claimed the legislation would hamstring budgets and compromise valued municipal services. Now that SB 2 is law, city officials are forced to rethink how they sustain their general funds.

“[Revenue is] still increasing, just not at the same pace we have recently seen or, absent a cap, would have been able to grow organically,” Deputy City Manager Don Magner said.


Because SB 2 does not take effect until January, the city’s fiscal year 2019-20 budget, scheduled for adoption Sept. 9, will not be affected.

Still, with less than a year until budget planning resumes, time is of the essence in charting a course of action.
SB 2 slows the rate at which cities can realize property value appreciation. Any time property tax collection threatens to push revenue past 3.5%, city staff in Richardson will propose a reduced maintenance and operations tax rate.

The city estimates SB 2 could inflict a $7.2 million hit to its operational budget over the course of three years beginning in fiscal year 2020-21.

“From now on we will be talking a lot about the [maintenance and operations] tax rate and what is the reduction piece on that,” City Manager Dan Johnson said at July 15 budget workshop.

Currently, Richardson residents contribute $0.37413 per $100 of home valuation toward the city’s operating costs. That portion of the tax rate will most likely decline starting in fiscal year 2020-21.

SB 2 also poses new obstacles in the area of economic development. Whereas some cities dedicate $0.01 of local sales tax toward bankrolling business incentives, Richardson uses that money to fund Dallas Area Rapid Transit services. As a result, it has historically dedicated $0.00125 of property tax revenue to pay for economic development—a practice that is now threatened by SB 2.

“You can use [economic development corporations] to offset a lot of operational costs—Richardson does not have that luxury,” Magner said.

The SB 2 property tax cap excludes revenue created by new growth. But unlike some North Texas cities, that stipulation actually serves to put more developed cities such as Richardson at a disadvantage, Magner said.

“In a city like Richardson, our ability to raise new revenue is much more tied to the increase in reappraised value than in a city like McKinney,” he said. “If these other cities are growing and are able to bring on new revenue in different ways, we will have to factor that in to remain competitive.”


Johnson laid the road map for what needs to happen now in anticipation of budget planning next July.
First, staff will need to evaluate recurring costs of new programs and services. It will also need to take a hard look at which existing programs and services are considered essential to the community and which may no longer be a priority.

“Any recurring costs are going to have to be heavily weighed,” Magner said.

Also, established departments will need to analyze prior years’ master plans to determine whether or not the city can still afford planned capital projects in light of a reduction of its operating revenue.

Finally, Johnson directed staff to consider restructuring user fees for certain city services, a practice Mayor Paul Voelker said could unfortunately become commonplace in the era of SB 2.

Areas the city pledges to protect from SB 2 cuts include neighborhood initiatives, urban and commercial village development, maintenance of infrastructure and facilities, and operations costs related to customer service.

“Sustaining attention to these community priorities is critical, even as we embrace new budget development realities,” Johnson said.
By Olivia Lueckemeyer
Olivia Lueckemeyer graduated in 2013 from Loyola University New Orleans with a degree in journalism. She joined Community Impact Newspaper in October 2016 as reporter for the Southwest Austin edition before her promotion to editor in March 2017. In July 2018 she returned home to the Dallas area and became editor of the Richardson edition.


Texas Commissioner of Education Mike Morath announced in a June 30 State Board of Education meeting that students will be taking the STAAR in the 2020-21 school year. (Courtesy Pixabay)
Education organizations call for STAAR requirements to be waived another year

Gov. Greg Abbott waived the State of Texas Assessments of Academic Readiness, or STAAR, testing requirements in March of earlier this year in response to the coronavirus pandemic.

With a clinical background in internal, pulmonary and critical care medicine, Corry has been with BCM for 20 years. He now focuses primarily on inflammatory lung diseases, such as asthma and smoking-related chronic obstructive pulmonary diseases. (Graphic by Ronald Winters/Community Impact Newspaper)
Q&A: Baylor College of Medicine's Dr. David Corry discusses immunity, vaccine production amid COVID-19 pandemic

Rapid development and distribution of a vaccine worldwide and successful achievement of herd immunity will be key players in determining the lifespan of the COVID-19 pandemic, said Dr. David Corry, a professor of Medicine in the Immunology, Allergy and Rheumatology Section at Baylor College of Medicine.

Dallas County commissioners agreed to contribute partial funding to the study at a July 10 meeting. (Courtesy Dallas County)
Dallas County commits $500K to scientists looking to pinpoint regional prevalence of COVID-19

Thousands of cases have been confirmed in the Dallas-Fort Worth area, but insufficient testing capacity and the prevalence of asymptomatic carriers mean scientists have an incomplete picture of the virus’s impact on the region.

The new partnership will provide on-site, same-day testing and results for assisted-living facility staff and their residents. (Courtesy Adobe Stock)
State announces partnership for increased COVID-19 testing for patients, staff at assisted-living facilities, nursing homes

These test sites will help the state work toward the goal of processing up to 100,000 tests in the first month.

The business has another location on Hillcrest Road in Dallas. (Courtesy Rallye Auto Service)
Rallye Auto Service shutters Richardson repair shop

The business has another location on Hillcrest Road in Dallas.

If an employee tests positive for COVID-19, establishments are encouraged, but not required, to follow Centers for Disease Control and Prevention and state guidelines. (Katherine Borey/Community Impact Newspaper)
Texas restaurants, businesses not required to disclose positive COVID-19 cases

If an employee of a business or restaurant tests positive for COVID-19, establishments are encouraged, but not required, to follow Centers for Disease Control and Prevention and state guidelines.

The annual Heights Car Show will look slightly different from years past. (Courtesy David Alvey)
The Heights Car Show to host socially distanced event and food drive

The 2020 show will mark the event’s 13th anniversary.

The draft policy was released a week before the district will require parents to report their interest in the district’s alternative, fully remote learning track. (Courtesy Pexels)
Draft policy: Plano ISD to require masks, take other health measures if students return to campuses in fall

The policies, while subject to change, represent the fullest picture yet of what a return to classrooms could look like if Plano ISD schools are able to reopen in the fall.

Effective July 9, hospitals in more than 100 counties across the state must now postpone elective surgeries unrelated to COVID-19. (Courtesy Adobe Stock)
MAP: Governor expands restrictions on elective surgeries to more than 100 Texas counties

Texas Gov. Greg Abbott expanded the restrictions that initially required only hospitals in Bexar, Dallas, Harris, and Travis counties to postpone all non-medically necessary surgeries and procedures that are unrelated to COVID-19.

(Community Impact Newspaper staff)
DATA: Thousands of Dallas County residents turn out to vote early in Democratic primary runoff

According to the Dallas County Elections Office, 41,901 county residents have cast ballots in person since polls opened.

The restaurant serves a variety of noodle dishes. (Courtesy Sakhuu Thai Cuisine)
Sakhuu Thai Cuisine now open in Richardson

The restaurant serves a variety of dishes, such as sakhuu stuffed wings, Bangkok lo mein noodles and panang curry.

Despite a pandemic, Richardson sales tax receipts increase by 10% in May

The city collected $3.2 million in sales tax in May, which is up from the $2.9 million collected at the same time last year, according to data from the Texas Comptroller’s Office.