America's Property Tax Advisor

Texas Revisits Property Tax Rollback Cap


Texas Governor Greg Abbott named property tax reform as one of his emergency items for the 2019 legislature. Previous attempts by lawmakers to control rising property taxes have failed. Senate Bill 2 and House Bill 2, both named the Texas Property Reform and Relief Act of 2019 won’t provide cuts to property tax bills. Instead they limit the amount of revenue that local governments can collect without voter approval.


Currently, Texas voters can petition to overturn tax increases that lead to revenue collections greater than 8% over the previous year. The bills making their way through the legislature automatically require a public vote if a municipality raises it tax revenue by more than 2.5%. – no signature gathering, or petition filing is needed.


The Problem – Rising Taxes


For the past three years, the property tax burden in Texas has ranked among the 14th worst among all 50 states, according to the Tax Foundation’s 2019 State Business Tax Climate Index.


A recent article in Forbes Magazine indicated that local property tax collections in Texas increased 70% from 2007 to 2017. Those collections increased nearly 90% faster than the state’s population and inflation growth.


Funding Schools


Texas has been drawing more heavily on property taxes to pay for public education. About 60% of the average property tax bill goes to fund local school districts. Efforts to reform school finance and have the state pay more are intertwined with property tax reform.


Texas lawmakers haven’t laid out a plan for how they can achieve this goal and how much money they want to spend. A school finance commission report estimates $8 billion would be needed. The question remains - where does the money come from?


Some Municipalities Push Back


Some local officials have testified against the proposed rollback rate cap claiming it would keep them from collecting enough tax revenue to provide necessary services. But not all local leaders share this belief.


Chris Hill, County Judge of Collin County explained, “Many will lament that Senate and House Bill 2 will cap our property tax revenues and violate the sacred principle of local control. But quite frankly, we know that the purest form of local control is allowing our citizens to vote on these property tax increases.”


If a law is passed and a municipality doesn’t increase its tax revenues above 2.5%, property taxes won’t be as high as they could have been without the cap. However, this does not cut taxes, it merely slows their increase.