AUSTIN — Republican leaders promised tax relief for property owners this year, but that relief might be less significant for Texans in small cities and counties.

More than half of counties and the vast majority of cities would be exempted from priority legislation to cap property tax revenue growth for cities and counties at 2.5 percent a year. The companion bills filed in the House and Senate last week to alleviate overburdened taxpayers has a carve-out for taxing entities that collect less than $15 million in combined sales tax and property tax revenue.

Under the bill, local governments could exceed the cap by holding an election. The current cap on property tax growth for local governments is 8 percent, at which point voters can petition for an election.

Some 154 of the 254 Texas counties — home to over 1.8 million people — would be exempt from the proposed changes. Also, 1,082 of 1,222 cities — where 4.3 million people live — are exempt, according to a review of data collected by the Texas Municipal League and the Texas Association of Counties.

David Clark, a policy analyst for Sen. Paul Bettencourt, R-Houston, said in an email that most Texans would still benefit because they live in the bigger cities and counties where the caps would apply. He noted that 60 percent of people who live in cities would see an impact.

He also called the bill a starting point.

“We will see where the conversation leads in the legislative process,” he said. Bettencourt is the Senate sponsor of the bill.

Bennett Sandlin, executive director of the Texas Municipal League, said the exemptions serve no purpose other than to win votes in the House and Senate.

“It’s designed to find easier votes, particularly from rural members who might not have any cities or counties who are affected by this bracket,” he said.

Fate's example

But Lorne Megyesi, the mayor of Fate in Rockwall County, said the exemption for small governments is necessary because their budgets are already so limited. Fate had combined property tax and sales tax revenues of about $4 million this year, so it would be exempted under the current version of the bill.

Megyesi said his city has grown from 9,300 people to 17,000 since 2014.

“With that growth we have lots of new roads and infrastructure, but we don’t have a lot of tax dollars,” Megyesi said. “We are a bedroom community and we don’t have a lot of commercial. Most of our dollars come from property taxes, so it would be very detrimental to the city to limit that.”

This year, Fate City Council members took the rare step of increasing property tax collections above 8 percent over the previous year, which could have led to an election to roll back the rate, but residents did not file a petition to contest the increase.

While the exemption applies to many cities, counties and special taxing districts, there is no such exemption for school districts. So even people living in an exempt city could see some relief on their overall tax bill.

Questions about exemptions

Rep. Trey Martinez Fischer, D-San Antonio, questioned why a tax policy wouldn’t be applied uniformly across the state.

“If property taxes are such a priority and this is on the hearts and minds of people all around the state then this tax policy ought to apply to 28 million people across the state,” he said. “If this just becomes a fight between the governor and the 10 or 15 largest cities in the state, then it begs the question of are you trying to effect policy or are you trying to send another message?”

Vance Ginn, an economist for conservative-leaning Texas Public Policy Foundation, said he supports the bill but hopes the proposal will be amended at some point to include all of the state.

“This bill is on a good path in the right direction; it will slow the growth of property taxes, but we would prefer that this would be for all cities and counties and special purpose districts,” Ginn said. “These burdens are real across the state for small communities and large communities.”