Property Taxes At The Forefront During Legislative Session

After a day of meetings regarding property taxes, the Senate and the House postponed a proposal to a later date. The House plans to take up House Bill 2 again on Monday.

HB 2 and Senate Bill 2 would require cities, counties and other taxing units to receive voter approval before levying 2.5 percent more property tax revenue than the previous year. The current law allows local governments to increase revenues by as much as 8 percent before voters can weigh in via a petition drive.

HB 2 includes a carry-over provision that would allow taxing units to build up unused revenue growth for five years, allowing them to avoid the election trigger if they had less than 2.5 percent growth in preceding years.

The bill also exempts school districts, emergency service districts, hospital districts and junior college districts from key provisions. The Senate version does not exempt school districts. The rational is that this would lessen the burden on local governments when property taxes were reduced. 

Next week, House Joint Resolution 3 may be presented to the Ways and Means committee. That bill would lay out a plan to generate $5 billion dollars a year by increasing the sales tax one additional cent. The bill is being called a sales-tax-for-property-tax swap by some. 

Texas imposes a 6.25 percent state sales and use tax on all retail sales, leases and rentals of most goods, as well as taxable services. Local taxing jurisdictions (cities, counties, special purpose districts and transit authorities) can also impose up to 2 percent sales and use tax for a maximum combined rate of 8.25 percent.Texas is currently listed as having the 12th highest sales tax rate in the country. 

The proposed legislation, as it now stands, will require a constitutional amendment and voters would have to approve the sales tax increase. A constitutional amendment means that the legislation must pass each chamber with a two-thirds vote.

This article was originally published by Strategic Partnerships Inc.