Opinion

Revenue caps heavy-handed, bad for Texas

Sen. Paul Bettencourt, left, is the author of Senate Bill 2, which would gut local government’s ability to tax. Here he celebrates in 2014 with now Lt. Gov. Dan Patrick after the polls closed in the Republican primary runoff election in May that year. less Sen. Paul Bettencourt, left, is the author of Senate Bill 2, which would gut local government’s ability to tax. Here he celebrates in 2014 with now Lt. Gov. Dan Patrick after the polls closed in the ... more Photo: Smiley N. Pool /Houston Chronicle Photo: Smiley N. Pool /Houston Chronicle Image 1 of / 1 Caption Close Revenue caps heavy-handed, bad for Texas 1 / 1 Back to Gallery

Would capping the city of San Antonio’s revenue to, say, growth of 4 percent a year or less be a good thing?

Lt. Gov. Dan Patrick and a host of state lawmakers think so. They have framed such revenue caps as a crucial way to curb runaway property taxes, and, in turn, the scope and reach of local government. This will be a priority for Patrick next legislative session.

Property taxes in Texas are sky high, but is boxing in cities and counties the right policy to address the issue?

The facts suggest otherwise.

To begin with, school districts tend to drive property taxes, not municipal and county governments. For example, San Antonio City Manager Sheryl Sculley has testified to Patrick’s special committee on property taxes that the city represents about 22 percent of its residents’ property tax bills.

If Patrick is serious about curbing property taxes, he should start by leading the legislative charge to adequately fund education, which would then take the burden off homeowners.

Patrick has argued that city and county property tax levies have grown much faster than median household incomes. For example, since 2005, Bexar County’s tax levies have increased by 62 percent, he said. That sounds terrible, but what Patrick hasn’t acknowledged is that number is driven by new residents.

As Bexar County Judge Nelson Wolff has said, since 2005, Bexar County has added 344,000 new residents. If you take those new residents out of the equation, the property tax levy has increased by 24 percent for existing residents, which isn’t so off the mark with inflation. Assuming the population growth continues, it’s an open question whether cities or urban counties could offer adequate police and fire service to its residents with such caps in place. People might hate paying property taxes, but they do like it when police and fire respond promptly.

There are also concerns about what such constrictions might do to city and county finances. For example, would a revenue cap jeopardize the city of San Antonio’s AAA credit rating? Any downgrade in a city’s credit rating would make borrowing costs more expensive.

At the very least, such a cap on revenues would strip away flexibility and make it that much more challenging for cities to set aside proper reserves. Taking flexibility from local governments could prove disastrous when an economic downturn hits. Not all years are created equally in terms of tax revenue.

We suspect this really isn’t about property taxes for Patrick and other lawmakers. This is just a proxy for sticking it to cities and counties that don’t march to the beat of the Legislature’s hyperconservative drum.

They’ve said as much. Here’s what Sen. Van Taylor, R-Plano, recently wrote about spending caps:

“The more government spends, or expands its reach by intrusive and unnecessary regulations, the more freedom it takes away from the people it serves. That is why meaningful spending caps are critical to prolonged prosperity and opportunity.”

Be wary about anyone who promises more freedom by limiting the freedoms of others, in this case local government. When we are talking property taxes and equality in the tax system, revenue caps are a red herring. One that ignores the realities of municipal budgeting, the inequalities between commercial and residential property owners, and the dire need for the Legislature to adequately fund our schools.

Besides, there is already a mechanism for curbing property tax rates and revenues. If residents don’t like the amount of property tax revenues cities and counties are collecting, they can vote out their elected local representatives.