After hearing unified public opposition to increasing the tax burden on citizens already struggling from months of government-ordered shutdowns, officials in a North Texas city postponed laying the groundwork for setting a substantially higher property tax rate—an increase they said is justified by the Chinese coronavirus outbreak.
On Monday, Waxahachie City Council voted unanimously to table until July 20 a resolution to calculate the city’s “voter-approval” tax rate for 2020 based on an 8 percent revenue increase—much higher than the limit on tax increases set by last year’s property tax reform legislation, Senate Bill 2.
SB 2 prevents most cities from raising tax revenues by more than 3.5 percent a year unless voters approve the additional tax hike. The calculation excludes new construction and taxes collected to repay debt.
But a loophole in the law allows cities to raise property tax revenues by up to 8 percent—the old limit—without voter approval, if certain disasters are declared.
The bill’s authors have said their intent was to address natural disasters, such as hurricanes, that damage or destroy property. Yet cities, including Dallas, have claimed the statewide coronavirus disaster order qualifies them to jack up property taxes on struggling families and businesses this year.
“TML has recommended that because the city of Waxahachie, as well as a number of cities, are located within a declared disaster area … that they do have the ability to calculate the rate for this year at 8 percent rather than 3.5 percent, as we are in a year of having a disaster declared,” City Manager Michael Scott told councilmembers Monday.
“TML” refers to the Texas Municipal League, a taxpayer-funded lobbying organization that last year gave a presentation to city officials on extracting revenue from taxpayers entitled “Shaking the Money Tree.”
Scott said the resolution was needed so the Ellis County Tax Office could calculate the “upper limit” before the city sets a tax rate, adding he thought there had been “some misinformation spread throughout the community.”
Waxahachie residents told councilmembers they want the city to keep their tax rates low, not raise them, as they deal with economic hardships caused by government-mandated coronavirus closures.
“People are already under serious, serious financial problems this year alone,” Amy Hedtke told councilmembers during public comments. “The city, the county, and the state have shut down businesses, made it impossible for people to pay their own bills, and the last thing we need is a tax increase by any of the different entities that are involved in raising property taxes.”
“Everybody needs to work together on this to keep taxes low,” Hedtke said. “The city should be lowering taxes even more than they already have.”
“It’s simply despicable,” said Paul Christenson, who is running for City Council Place 1 against Mayor David Hill. “Over the last four years alone, they’ve increased property tax collections by 10 percent a year, over 50 percent just the last four years.”
“I’ve seen you hire dozens and dozens of new positions that have no impact at all on the service level for the people of this city,” Christenson told councilmembers. “Now you want to build a new city hall annex at a cost of $10 million … to house all these extra positions? It’s awful, it’s terrible, and it’s horrible, and you should be ashamed of yourself [and] what you’re doing here.”
“I’m very concerned about the potential increase of our city taxes beyond the legislative limit of 3.5 percent,” said Sylvia Coulson. “People are suffering. Many have lost their income and are struggling to make ends meet. It’s time for the city to determine what is essential, such as police and fire and services, and place the other items in a nonessential category.”
“The Dallas City Council rejected looking at the 8 percent property tax increase,” Coulson added. “Dallas is hardly the bastion of fiscal restraint. I would hope Waxahachie would beat Dallas on that case.”
Coulson noted Waxahachie was allocated $2.1 million in federal Coronavirus Relief Fund money via the $2 trillion CARES Act passed by Congress in March. Mayor David Hill confirmed the city has already received $425,000.
“Please help me and other members of this community stay members of this community,” said Michelle Hanson, who moved to Waxahachie from Dallas three years ago—in part because of the city’s affordable property taxes—and lost her job in April. “I encourage you to not raise property taxes.”
Christopher Haley asked the council to table a decision until they can provide more information to citizens about the city’s current deficit and plans to mitigate that, in addition to any tax rate increase.
“What cuts are you planning to make to address that? What cuts in staff? What cuts in services?” Haley asked. “Help us, the citizens, by giving us more information than just ‘we want to increase the tax rate.’”
“I don’t know why I feel like I’m being put on the spot here,” said Councilmember Kevin Strength. “We’re not raising the tax rate, just getting the information.”
“We’re going to be under the cap from now on,” Strength said. “We have to have a year or so in order to transition to that. … I don’t want to tie myself down to 3.5 percent because I don’t know what I’ve got yet. … I can commit to you that I don’t want to raise the tax rate.”
“We are not the appraisal district,” he added. “We do not set the rates. Some of my properties went up a lot.”
Local taxing entities do, in fact, set tax rates, after county appraisal districts assess property values. The tax rates localities like Waxahachie set on those values determine the size of property owners’ tax bills. If tax rates are not lowered enough to offset increases in property values, residents’ tax bills will go up.
No councilmember moved to vote on the 8-percent resolution; members then voted to table the decision until the next council meeting.
“I’m disappointed we weren’t able to at least set our upper limit at 3.5 percent,” said Councilmember Melissa Olson, who encouraged residents to participate in the discussion. “It’s the lesser of two evils: it’s a 3.5 percent revenue increase or an 8 percent revenue increase. So either way, we’re getting more revenue.”
“I think that we could have done the 3.5 percent, especially when new construction isn’t even considered in that equation,” she added.
Waxahachie has grown by a third since 2010 to almost 40,000 residents.
Hill, Strength, and Olson are running for re-election this year.
All council positions are at-large, elected by voters citywide, but candidates choose to run for specific seats. Strength, who currently sits in Place 2, chose to challenge fellow incumbent Olson for Place 3.
The city’s May elections were moved to November 3 due to the coronavirus outbreak.