The Texas House Local Government Ways and Means Committee chaired by State Rep. Fred Hill (R-Richardson) has released its interim report.  News coverage of the report has centered on its opposition to appraisal caps, which was hardly surprising since Chairman Hill has been among the most vociferous critics of such caps.Â

fhillHowever, what is alarming about the report is its full throttle opposition to any constraints on the growth in local government.  Indeed, the report goes so far as to advocate watering down the current 8 percent rollback rate on county and city property taxes by adusting this amount for the impact of unfunded state mandates.  Adoption of this recommendation with no other changes would actually allow local governments to increase their property tax burden even more than they can currently.  Bear in mind that from 1999 to 2005, local property tax appraisals rose by 75 percent while Texans’ personal incomes went up only 35 percent.

Local governments can now increase their tax rates up to 8 percent above the effective rate, which is the rate it would take to bring in the same amount of money as the previous year. Voters can stop them from going beyond 8 percent, known as the rollback rate, by collecting signatures to force a vote.

The Property Tax Reform Task Force convened by Governor Rick Perry and chaired by former Texas Republican Party Chairman Tom Pauken is likely to recommend limiting the increase to 5 percent instead of 8 percent or stopping it at the rate of population growth plus inflation

The report repeats the usual criticism against appraisal caps that they unfairly treat new home buyers relative to long-time residents in the same home, but that does not explain the report’s virulent opposition to revenue caps as described above.  The interim report’s rejection of revenue caps is apparently based on its conclusion that local governments need an unlimited revenue stream to fund supposedly exploding “personnel costs” and deal with hurricanes.   One telling passage of the report states that for local governments, “their ability to reap the benefits of economic growth through taxation is perhaps the most important tool in their arsenal.”  Silly us – we thought taxpayers should reap the benefits of economic growth which is the fruit of their own labor

The only solution the report offers for restraining local property taxes is prohibiting unfunded mandates from the state.  While this suggestion has some philosophical appeal, the report acknowledges that there is no agreed upon definition of what constitutes an unfunded mandate.  For example, every misdemeanor could be viewed as an unfunded mandate because counties must pay for sherrifs and county jails.   The report suggests that a rule against unfunded mandates could be enforced by the courts, but this would be probably be costly and time consuming.  Ultimately, this is a recommendation that is unrealistic and was likely trumpeted as a red herring to paper over the fact that the report basically calls for no new limits on local government spending and in fact a loosening of the current limitation.

By the way, our kudos to State Rep. Gary Elkins (R-Houston), a member of the Local Government Ways and Means Committee, who courageusly declined to sign onto the report.