Why No Compromise on a Revenue Cap?

Last Tuesday, the House Committee on Ways and Means substituted a six percent property tax revenue cap into the Senate’s revenue cap bill (S.B. 1), replacing that bill’s four percent cap.  So, six is at least a little better than four, right?  Wrong.

The fact that S.B. 1 and H.B. 4 focus solely on city and county taxes and ignore the elephant in the room – school funding – means that no proposed cap can actually solve anything and would only continue to make cities an easy target in the future.  Moreover, the House sponsor of S.B. 1 has said, and we agree, that the bill offers no real tax relief.  

As the League has explained recently, the point of a city revenue cap is simply to divert attention from the fact that state government has doubled-down on its strategy of riding school property taxes ever skyward while state funding of schools decreases.

Despite all that, isn’t six still somewhat better than four?  No, it’s just the first step toward more punitive measures in the future.  Unless and until the legislature enacts significant reforms to the school funding problem, it will continue to blame cities and counties for high property taxes.

Think of it this way:  suppose the legislature adjourns from this special session having enacted a six percent revenue cap.  Over the next biennium, taxes won’t be lowered (as already stated by the House author).  Then imagine in 2019 that the legislature once again lacks the resolve to solve school funding (not hard to imagine absent court mandates).  What will they do?  It’s easy, just blame the cities and counties once again and lower the cap from six percent to four percent and claim victory.  In 2021, they can go from four percent to two percent and say, “we’re making progress.”   

Thus, city officials need to stand strong against the idea that any change in rollback rates is good public policy.  Key legislative leaders understand that city property taxes are not the real problem.

The League is opposed to any version of a city revenue cap bill because it offers no tax relief for homeowners and it’s an assault on the ability of Texans to decide at the local level what is best for their community.  City officials need to make that point to their delegation now.

TML member cities may use the material herein for any purpose. No other person or entity may reproduce, duplicate, or distribute any part of this document without the written authorization of the Texas Municipal League. 

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