One way to reduce the size of government and the high property tax burdens on Texas taxpayers is capping the amount of revenue local taxing entities can collect.
While local government leaders, Texas Municipal League, and Texas Association of Counties regularly voice strong opposition to placing restrictions on themselves, the reality is that such caps would force local governments to prioritize essential services, curb wasteful spending, and prohibit unnecessary tax increases without taxpayer approval. Additionally, capping revenue collections would provide a hindrance to local governments wishing to participate in crony spending projects and corporate handouts like tax abatements.
Some local taxing entities already have revenue caps in place. The City of Houston has a property tax revenue cap that limits growth at 4.5% or the growth of population and inflation. While local officials lament that this ties the hands of municipal government, that isn’t the case. The cap simply forces a prioritization of spending so that basic city functions are sure to be taken care of.
Also, it is important to recognize that this limit is not a hard cap, it is a floating cap. If population grows, the amount of property tax revenue able to be collected increases as well, so the argument that the cap hinders officials from keeping up with growing populations is demonstrably false.
The cap also forces government to come to taxpayers to justify additional revenue if needed. For instance, shortly after Houston’s cap was in place officials asked voters to approve additional revenue collections solely to fund police pensions. Voters approved.
The benefits of revenue caps to Texans living under wasteful local governments is clear. In an era of ever-growing property tax burdens around the state, we should implement effective tools that curb the growth of government and strengthen fiscal responsibility at the local level.
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