Lower Revenue Cap = Fewer Local Services

Dick Lavine, Senior Fiscal Analyst at the Center for Public Policy Priorities

We’re continuing our week-long march through tax policy proposals, and today we look at a proposal to lower the cap on local government property tax revenue. SB 182, authored by Senator Paul Bettencourt, and HB 365, by Representative Gary Elkins, aren’t part of the $4.6 billion package of tax cuts senate leaders introduced this week, but they stand to do measurable harm to city and county governments’ ability to fund local services.

Voters can currently petition to “roll back” a property tax rate if a local government proposes to increase its property tax revenue by more than 8 percent, excluding new construction.

Lower Revenue Cap Makes it Harder to Fund Local Needs

The proposed changes to the revenue cap would make it harder for cities, counties, community colleges and hospital districts to raise revenue to support services at a time when the state does little to aid them in providing public services. The proposed changes would lower the trigger for a revenue cap election from 8 percent to 4 percent and make the election automatic, rather than by petition. Reducing the rate to 4 percent would reduce the flexibility local governments need to address local issues and provide critical services to their communities.

As Harris County Judge Ed Emmett observed in his State of the County address last week, the Senate’s rush to implement “arbitrary limits” on the county’s revenue or spending isn’t good legislating, it’s merely “good sound bites.”

Houston Chronicle editorial, February 18, 2015

Local property taxes pay for important local services, such as emergency services, community colleges, public hospitals and clinics, neighborhood parks and libraries. Capping the revenue that cities, counties, community colleges and hospital districts can raise by lowering the revenue cap would make it even more difficult to provide these services with a fast-growing population.

The state has pushed more and more responsibility for funding public services onto local governments. The current fervor for reducing taxes won’t help Texans when their cities, counties, community colleges and hospital districts have fewer law enforcement officers, slower emergency response, unsafe roads, and insufficient resources to serve their growing populations.

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