The Senate’s latest taxpayer protection measure came in the form of a floor amendment added to Senate Bill 1760, a bill to advance transparency and accountability in the local property tax system. The amendment could be a game changer for property taxpayers.
Here’s why: The Senate’s proposal would make it harder for local governments to raise property taxes, which are already some of the highest in the nation. It does so by requiring local governing bodies to meet a higher threshold to approve property tax increases.
The amendment, overwhelmingly passed in the Senate by a margin of 24-7, changes the voting requirement needed to raise the property tax rate above the effective rate — which is the tax rate needed to bring in the same amount of revenue as the previous year — from a simple majority to a 60 percent majority.
What this means in practice is that if you have a seven-person governing body, then instead of requiring four members to approve a tax hike, it will take five. If you have a nine-person governing body, then it will move from five to six. And if you have 11, such as the cities of San Antonio and Austin, the threshold moves from six to seven.
This is huge. It makes it easier for taxpayer-friendly local elected officials to block a tax increase, and makes the burden of passing a tax increase that much harder on those who decide to do so. It applies to every tax increase above the effective rate, which also ropes in those tax increases higher than the rollback rate.
Some local government officials will undoubtedly cry foul at this proposed change because property taxes constitute their biggest revenue stream. But the change does not directly do anything to harm local tax revenue. It doesn’t even give voters any additional power over the tax process, which several bills in the Legislature proposed to do via revenue caps.
It simply requires local officials to be that much more certain about the need to raise property taxes and be willing to take a stand on it—exactly the kind of reform that’s needed for a broken system.
Consider some of the latest data:
- Texas’ property tax is the single largest tax assessed in the Lone Star State, accounting for almost half of all state and local tax revenues. In fiscal year 2013, the tax collected more than $45 billion from homeowners and businesses, up from $22.5 billion in fiscal year 2000.
- Texas’ property tax is among the most punishing in the nation. According to the Tax Foundation, Texas’ local property tax system ranks as the 14th worst for taxpayers and collected almost $1,500 per capita in 2012.
- Texas’ property tax is also outgrowing our ability to keep pace with it. According to the Texas Comptroller’s report “Your Money and the Taxing Facts,” from 1992 to 2010 population grew by 40 percent whereas local property tax levies grew by 188 percent. That’s a difference of nearly 5-to-1.
Almost any way you cut it, it’s become clear that long-term structural reform is needed to protect Texans moving forward. Long-lasting changes, similar to what’s been proposed by the Texas Senate, are of the utmost importance.
With this important taxpayer protection having been overwhelmingly adopted in the upper chamber, the proposal now heads to the Texas House, where tax-weary Texans are, no doubt, hopeful for permanent property tax reform.