SB 182 fights tax revenue growth

FRS-2015-05-17-mWith less than a month left in the 84th Texas Legislature, North Texas city leaders are fighting against a bill they say could hinder future city planning. Senate Bill 182 automatically calls for an election if a city or county adopts a tax rate that exceeds the rollback tax rate. If residents do not approve the new tax rate, the city cannot adopt a tax rate that year that exceeds the rollback tax rate.

Current state law says residents can petition for an election if the tax rate is more than the rollback tax rate.

A rollback tax rate is the tax rate that allows a city or county to raise the same amount of money for maintenance and operations as the previous year and provides for an 8 percent cushion. SB 182 calls for that cushion to be changed to 6 percent. State Sen. Paul Bettencourt, R-Houston, said he filed the bill because people are “being taxed out” of their homes.

“The problem with [property] taxes is that appraised values can leap
10 percent for a homeowner, but the tax rate never goes down,” he said.

Last year, Frisco City Council approved lowering the property tax rate from $0.4619 to $0.46 per $100 of valuation. But Frisco property values increased by 13.64 percent, increasing property tax revenue by 13.17 percent.

During a Plano Chamber of Commerce luncheon last month, Frisco Mayor Maher Maso said SB 182 takes away local control by capping the revenue from property taxes. In the fast-growing city of Frisco, this bill would mean the city would have to hold an election every year because the adopted tax rate has been more than the rollback tax rate, Maso said.

“That sounds good on the surface to a regular person, but it means we’ll have to create two budgets because we don’t know which one will pass,”
he said.

The average property owner would save only about $36 per year, but the city of Frisco would lose about $3 million per year in income if the tax rate was reduced to the rollback tax rate, said Shona Huffman, Frisco Chamber of Commerce director of Governmental Affairs.

“What that does is it starts to cripple the budget process for the local municipality in being able to plan for first responders and the ins and outs operations that they have,” she said.

As of early May, the Senate Finance Committee was considering SB 182.

Maso said North Texas communities are not asking for more money; rather, they are asking the Legislature to let the leaders closest to the communities determine what is best.

“Cities are not where the tax burden is,” he said. “… Our prime focus is to make sure that bill does not pass.”


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