Second Of Four Part Series: A Closer Look At Senate Bill 2: Automatic Rollback Elections

Under current law, if a commissioners court adopts a total tax rate that exceeds the revenue cap, then voters may petition to hold a rollback election.

This is the second part of a four part series that that will published throughout this week. Read part one HERE.

by, Ender Reed, Legislative Liaison

In an effort to take a closer look at Senate Bill 2 (SB 2) by Sen. Paul Bettencourt (R-Houston), the revenue cap bill, Texas Association of Counties (TAC) are highlighting and discussing specific sections of the bill as part of a series of four articles.

In this second article, TAC discusses the effort to require an automatic election for a tax rate that exceeds the revenue cap (also known as the rollback rate).

What is a rollback election? 
Under current law, if a commissioners court adopts a total tax rate that exceeds the revenue cap, then voters may petition to hold a rollback election. If the result of the rollback election is that voters reject the proposed tax increase, then the tax rate is reduced to the revenue cap.

There are two separate requirements for the petitions depending on the size of the taxes collected by a county:

• For a county that collects at least $5 million in M&O taxes a petition must be signed by 7% of the registered voters in the county.
• For a county that collects less than $5 million dollars in M&O taxes a petition must be signed by 10% of the registered voters in the county.

For all counties, the validity of the signatures on the petition must be determined within 20 days or the petition is considered valid automatically. If the petition is found valid, a rollback election must be held within 30 to 90 days.

If the voters reject the increase, the total tax rate must be reduced to the revenue cap rate.

SB 2 proposes to end the petition requirements and instead require an automatic election for a total tax rate that exceeds the revenue cap.

Proponents of this proposal argue:

• That the petition process is an unnecessary extra step.

• That voters don’t have a voice in the property tax process.

• That the petition requirements are particularly burdensome for persons in large counties for whom 7% of registered voters is a large number.

• That the school tax setting process, which requires an automatic rollback election, is an example of a better system.

Opponents of an automatic rollback election argue:

• That in a representative government system, voters have a voice in the property tax system when they vote their elected representatives in or out of office.

• There are multiple opportunities for citizens to engage in the tax rate setting process during public hearings.

• That requirements should be different from the school tax rate process because state funding is a large part of school revenue whereas property taxes are counties’ main source of funding.

• That the automatic election on the tax rate is arbitrary in that it has no relation to the cost of operating government such as funding the jail or preparing for emergencies.

• That, in some cases, the rollback election will cost more than the county will collect in additional taxes. ~

Read the first County Issues article in the series, which reviews the effect of reducing the current revenue cap to 4%: A Closer Look at Senate Bill 2: Lowering the Current Revenue Cap. 

Throughout this week, we will present a discussion by the Texas Association of Counties on the provisions in SB 2 that will require a county to automatically seek voter approval for any tax rate that would cause the 4% revenue cap to be exceeded. 

This series originally published by Texas Association of Counties (TAC).