In April, TPPF’s James Quintero testified before the Senate Committee on Local Government in support of Senate Bill 1428, a bill to add the term “epidemic” as an additional exclusion to exceed the voter-approval tax rate when a disaster has been declared. The bill has been approved by the full Texas Senate and has not yet been referred by the Texas House.

Below are his prepared remarks delivered orally to the committee.

Mr. Chairman and Members of the Committee—

My name is James Quintero and I represent the Texas Public Policy Foundation. I’m here today to testify in support of Senate Bill 1428.

When the legislature passed its signature tax reform package last session, no one foresaw the possibility of a pandemic or the government’s response to it. Nor did anyone envision that, in the midst of soaring job losses and long lines at food banks, some local officials would contemplate taking advantage of a perceived loophole to raise taxes excessively without voter approval. They did so on the basis of a misinterpretation of a provision in SB 2.

The number of jurisdictions exploring how and if to use the disaster tax loophole was not small either. According to the Houston Chronicle, “…at least 45 local governments, the city of Houston included, either went over the 3.5 percent or considered doing so…” With respect to Houston specifically, the Chronicle notes that even though the city reduced its tax rate, it “…allowed for revenue growth above the 3.5 percent cap but under the 8 percent cap.”

It’s unclear just how many jurisdictions ultimately adopted a tax rate that exceeded the voter-approval tax rate without consent; however, it’s evident that there are at least some cities and counties that believe they can circumvent voters to max out tax increases during an economic catastrophe.

Unfortunately, many of these ill-advised actions came in spite of strong warnings not to do so from the Governor, the Lt. Governor, the Attorney General, and the lead authors of last session’s historic tax reforms.

The last 12 months have made it clear that more changes are needed. The legislature must make it unmistakably clear that a pandemic is not a reason to permit revenue increases above 3.5 percent without voter approval.

For that reason, I urge the committee to look favorably on SB 1428. Thank you for your time. I look forward to answering any questions that you may have.