Senior Policy Advisor
The Senate Finance Subcommittee on Fiscal Matters, chaired by Sen. Glenn Hegar (R-Katy), heard testimony on two restrictive revenue cap bills – SB 102 and SB 144 – on Monday, March 25. The bills diminish local control by setting strict standards that hamper decision-making by locally elected commissioners courts regarding tax rates. A considerable number of county and city officials testified in opposition to both pieces of legislation, stating that the bills are anti-local control and unworkable “one-size fits all” solutions to a multifaceted and complex issue.
SB 102 by Sen. Dan Patrick (R-Houston) seeks to lower the revenue cap (rollback rate) from the current 8 percent to 5 percent. Under SB 102, any tax rate that the governing body seeks to adopt that exceeds the proposed 5 percent rollback rate would trigger an expensive automatic rollback election. Current law requires a petition process to call for an election to rollback a tax rate that exceeds the revenue cap. In committee, Patrick presented a committee substitute that would apply only to counties with a population of 250,000 or more.
SB 144 by Sen. Tommy Williams (R-The Woodlands) seeks to reduce the current 8 percent rollback rate on counties to 5 percent, except under a very limited set of circumstances in which the local governing body would undergo a series of procedures to raise the rollback rate to 8 percent. The limited circumstances that would allow for a higher than 5 percent rollback rate include instances when the county is located in a disaster area declared as such by the governor or president, or if the commissioners court finds the higher rate necessary for the protection of public safety.
Some who testified on the provisions of SB 144 mentioned that public safety is always a consideration when cities and counties make decisions. The bill creates a redundant qualification for setting the tax rate that implies counties have a different, questionable goal that does not include protecting public safety. SB 144 also requires commissioners court to describe the harm to residents that would occur if the taxing unit were subject to a 5 percent rollback tax rate. There is no definition language for “harm,” leaving a governing body to determine the range where “harm” may be included. The heart of local control is leaving decision-making at the local level. The existing revenue cap should not be lowered because each commissioners court needs the flexibility to set a budget that mirrors the needs of their community.
For more information, review this legislative brief, which explains the impact of revenue caps on local control, and this accompanying document,which details the top 10 reasons why revenue caps are a bad idea.