Senate panels OKs property tax restrictions, with swipe at S.A.

Senator Paul Bettencourt uses graphics to make a point while arguing with Bill Longley of the Texas Municipal League as the Senate Select Committee on Government Reform takes up SB 1 and other property tax bills on July 22, 2017. less Senator Paul Bettencourt uses graphics to make a point while arguing with Bill Longley of the Texas Municipal League as the Senate Select Committee on Government Reform takes up SB 1 and other property tax ... more Photo: Tom Reel, Staff / San Antonio Express-News Photo: Tom Reel, Staff / San Antonio Express-News Image 1 of / 17 Caption Close Senate panels OKs property tax restrictions, with swipe at S.A. 1 / 17 Back to Gallery

AUSTIN — Embracing pleas for relief from hundreds of taxpayers and dressing down cities including San Antonio, a Senate committee voted Saturday to put new limits on the ability of local governments to raise local property tax revenues unless they get a vote of the people.

“It’s all about the taxpayers’ money,” said Sen. Paul Bettencourt, R-Houston, author of the proposed tax changes and chairman of the newly created Senate Select Committee on Government Reform. “I think it’s very important that taxpayers have a say in their tax bills.”

With strong backing from Gov. Greg Abbott and Lt. Gov. Dan Patrick, Bettencourt is pushing to more tightly restrict the ability of cities, counties and special districts to increase property taxes. It’s one of several measures presented in this special session that seek to impose state regulations over local controls.

Local officials say the proposed restrictions on property taxes would mean little for individual taxpayers but would impair governments’ ability to pay for services such as public safety, especially in fast-growing cities such as San Antonio.

Bettencourt said taxpayers tell him they want relief from tax bills that are overwhelming. His legislation wouldn’t reduce current assessments but is aimed at trying to rein in how quickly bills can rise.

Current law allows voters to petition for a rollback election if a local government increases collections by more than 8 percent. Bettencourt’s Senate Bill 1, approved 5-2 by his committee Saturday, would change the rollback rate to 4 percent and make the election automatic. The vote was along party lines, with Sens. Carlos Uresti of San Antonio and Eddie Lucio Jr. of Brownsville, the two Democrats on the committee, opposing the measure.

The bill would exclude entities that collect less than $10 million, an exemption that Sen. Charles Perry, R-Lubbock, said he would seek to double when the bill hits the Senate floor, a move expected in the coming week. Senate approval will send the measure to the House for consideration.

Republicans on the committee sparred with opponents of the measure, including local officials and the Texas Municipal League.

“All we’re asking is that city officials be able to make the decisions that make the most sense for their community,” said the league’s Bill Longley.

Sen. Van Taylor, R-Plano, said he was “somewhat staggered” that Longley could argue both that the proposal would have little value for taxpayers while at the same time be destructive for cities.

“I’m amazed that you’re able to spin it that way,” he said.

Bettencourt zeroed in on San Antonio, which he said has increased its property tax levy from roughly $400 million to more than $540 million in three years.

“That’s astonishing. I think it’s terrible public policy,” Bettencourt told Troy Elliott, the city’s deputy chief financial officer. “That’s a maximum smash on taxpayers.”

Bettencourt said the 35 percent increase has driven up the average tax bill by 24 percent.

“Please just take back to your elected officials that I see there’s a tremendous need for more tax rate reduction here,” Bettencourt said.

City leaders countered that San Antonio has had years of negative revenue growth, excluding new construction, resulting in an average revenue growth over the last 10 years of 3.63 percent, according to Jeff Coyle, San Antonio government and public affairs director.

San Antonio is one of the fastest-growing cities in the nation, with a construction boom adding thousands of new taxable properties to the rolls. Market demand also has seen a marked increase in home values; the median home price was at $222,000 in June, up from $215,500 in April.

As city officials work to keep up with the rising demand for services, Elliott said, they have residents’ support for their budget decisions. He said officials take a transparent, grass-roots approach in reaching out to taxpayers about the reason for proposed increases and that they are “sensitive to the burden of taxes on our citizens.”

“Our process has worked for years, and our elected officials have been voted in by the constituents and … if they have an issue with what we’re proposing as professional staff and our elected officials are agreeing to, they would vote them out of office,” Elliott said, calling the city “very well financially managed.”

Elliott said the current process allows officials the “flexibility to meet the financial needs of the city,” citing pulls on revenue including public services, collective bargaining agreements and pensions.

The proposed restrictions would harm the city’s ability to support public safety and to service vital infrastructure, Elliott said. He said that by restricting the city’s flexibility, the restrictions also could affect San Antonio’s excellent AAA credit rating.

If the 4 percent rollback had been in effect over the past 10 years, he said, the effect on San Antonio would have been about $298 million. For the current year, he said, the effect would be about $60 million on the general fund budget.

“That’s about the same as hiring 600 new police officers,” he said.

At the same time, he said, the lower rollback would have saved the average homeowner just $3.90 a month.

Taylor also needled Elliott, asking why San Antonio wouldn’t want to go to voters if officials believe they have their support.

“Your city clearly has intentionally avoided going to the voters,” Taylor said, seizing on a comment by Elliott that San Antonio officials view the current rollback rate as a ceiling and don’t exceed it. “I don’t know why you’re afraid of them.”

Elliott said, “We’re not afraid of them. I think our process … works for us.”

San Antonio voters in May overwhelmingly approved the largest municipal bond in the city’s history — $850 million — for citywide improvements.

The tangle between state and local officials came against a backdrop of Texans saying they need lawmakers to address property taxes that are straining their budgets. Taylor read from a stack of 434 pages of pleas for relief. Lucio joked that a letter from his own wife might be among them.

Among those who testified was the Rev. Marialice Billingsley of Kerr County, who said, “This has been my home for three generations. I don’t want to lose it.”

The back-and-forth also came as local governments and House Speaker Joe Straus, R-San Antonio, argue that the best way to reduce the local property tax burden is by revamping public school finance. School districts, which already have automatic rollback elections, wouldn’t be affected by Bettencourt’s proposal.

Schools rely heavily on local property taxes, along with receiving state aid.

In 2013, school districts statewide accounted for nearly 55 percent of the property tax levy, compared with 16.7 percent for counties and 16.2 percent for cities, according to the state comptroller’s office. In San Antonio, Elliott said, the slice of property taxes imposed by the city is 21 percent of the total tax bill.

The Senate in the regular legislative session earlier this year approved a version of the automatic rollback measure, which has been championed by Patrick. Senators are expected to again give the idea their approval in the special session, called by Abbott, who has emphasized the importance of property tax relief.

Its future in the House is less certain.

Rep. Dennis Bonnen, R-Angleton, chairman of the House Ways and Means Committee, didn’t bring up an automatic rollback proposal for a vote in the chamber during the regular session. He said then that there wasn’t enough House support to pass it and instead focused on legislation to better shine a light on the process and ensure that people get information about how their taxes are set and how they can affect their rates.

But Bonnen has since said support might be growing, and he reiterated that Thursday.

“I think there is better support in the House for an automatic rollback. We’re going to find out. I’ll certainly bring it up for a vote in my committee. We’ll see what happens,” he said. “I can assure you I am not going to back down from changing the present rollback rate. If cities and counties want to fight over that, I will be up for the fight.”

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