Some Local Governments Constantly Overtaxing Homeowners

By Lieutenant Governor Dan Patrick

Texans are frustrated with the unsustainable disconnect between constantly increasing local property taxes and household incomes.

That’s why in 2015, 86 percent of voters approved a constitutional amendment to increase their homestead exemption for the first time in nearly 20 years.

But more must be done to prevent Texans from being taxed out of their own homes, and that’s why I appointed a Senate Select Committee on Property Tax Reform and Relief to identify the scope of this problem and to propose solutions to the next legislature.

The facts are troubling and indisputable.

Since 2005, city and property tax levies have increased several times faster than median household incomes. Across the state, city tax levies have increased by 60 percent and county tax levies have increased by 70 percent, while median household incomes have increased by 26 percent.

In San Antonio, where the Select Committee held its first field hearing this past week, city tax levies have increased by 55 percent and county tax levies have increased by 62 percent, compared to a median household income increase of 22 percent.

This disparity is the result of the current property tax system that allows local governments to establish tax rates resulting in an 8 percent increase in revenue every year. (For comparison, the current 2-year state budget increased spending by 3.6 percent, or 1.8 percent a year.)

Local property taxes must not be allowed to continue to increase at several multiples of the income of taxpayers. Inflation requires some additional revenue to provide the same level of services, but the current 8 percent revenue cap is simply too high and must be reduced.

The mere suggestion of reducing the flow of revenue to local governments predictably elicits familiar warnings of reduced civil services such as police and fire protection, trash collection, and road maintenance, but potential reforms would only require cities and counties to make their case to voters before dramatically increasing their revenues. Pending voter approval, cities and counties retain total local control over where to set their tax rates.

In addition, automatic rollback elections should be required for any government entity seeking to exceed its revenue cap.

While school districts are automatically required to hold rollback elections when they exceed the 8 percent revenue cap, cities and counties further challenge taxpayers through a burdensome process that requires signatures from 7 percent of registered voters before holding a rollback election to overturn the proposed increased tax rate and return to the current rate. These signatures must be submitted within 90 days of the adoption of the higher tax rate. (In smaller jurisdictions, the threshold increases to 10 percent of registered voters.)

According to the Texas Secretary of State, there are 884,830 registered voters in the city of San Antonio, and 975,415 registered voters in Bexar County. That means San Antonio residents seeking to overturn excessive tax increases by the city must collect 61,938 signatures, or 68,279 signatures to stop excessive county tax hikes, in just 90 days.

Treating cities, counties, and schools the same will eliminate this unequal standard and further protect taxpayers.

Over the next several months, the Senate Select Committee on Property Tax Reform and Relief will continue holding hearings across the state, with its next hearing February 11 in Harlingen.

I look forward to the committee’s recommendations, to be issued later this year, but make no mistake: preserving the status quo is unacceptable, and the Texas Senate will act on this problem during the 2017 legislative session.