Governor Greg Abbott’s Tax Initiative
In the upcoming session of the Texas Legislature, Governor Greg Abbott proposes a revision to the current property tax rollback requirement for Texas cities. The current rollback requirement is 8%. Basically, cities can levy a tax rate in the budget process that will not generate more than 8% property tax revenue of the current year. If a city adopts a higher rate, citizens can petition to have the tax rate rolled back to the rate consistent with truth in taxation guidelines. The proposal from the governor would limit the cities to levy a tax rate based on an appraised value not exceeding 2.5% of the current year appraised valuation. My preliminary understanding of this proposal is that schools and counties would also be affected by this proposal.
As proposed, the Governor’s initiative would slow the rise in property tax payments from the individual taxpayer. As the local real estate market has rebounded from the recession of last decade, coupled with population growth and job prospects in the DFW metroplex, appraised valuations have followed the rise in real estate market values. The property tax payments are based on appraised valuations. Cities have ridden the rising tide of property tax revenue to improve community services. For example, Duncanville and Seagoville have increased resources provided for street maintenance.
Although the Governor’s initiative has not yet been adopted by the Legislature, I am concerned about the ability of cities to maintain the current level of services to the communities in the region. The initiative impact may be more severe to cities that are built out compared to growing cities. Choices may need to be made to continue or not continue public safety, public works and community/social services. Choices may need to be made concerning appropriate uses for undeveloped land. My recommendation is to watch this proposal carefully and be ready for critical discussions about the right response.