Taxes

One of the big accomplishments of the 2019 Texas State Legislature was the passing of a bill that slowed the growth of city and county tax bills by imposing a 3.5% cap on revenue collections over the previous year.  This was a change from the 8% allowed increase without voter approval.  Local city and county leaders say the move is dangerous and will result in cuts to service and an ability to fully pay for public safety.   The cap could be exceeded if voters approve the tax increase in an election.  Currently, cities and counties can increase tax revenue up to the 8% without approval from the voters.

• Dallas Morning News, May 28, 2019

More state funding for education requiring local school districts to reduce their tax rates.

Facing a cautiously optimistic fiscal forecast, lawmakers expect to have an additional $10 billion or so to spend over the next two years, compared with the previous budget cycle. They agreed to allocate $6.5 billion in new state funding for schools and $5.1 billion to buy down Texans' local property taxes, which are supplemented by state dollars to pay for public education.

In the end, lawmakers raised the price tag of their education and property tax proposals to about $11.6 billion, and they nixed the mandated across-the-board pay raise. Instead, the final proposal raises the amount of per-student funding each school district receives and mandates that a portion of that funding go toward salary increases and benefits. Districts are expected to prioritize raises and benefits for teachers with more than five years of experience, but otherwise would have flexibility on how to offer salary increases.

On property taxes, analysts estimate the bill would lower tax rates by an average of 8 cents per $100 valuation in 2020 and 13 cents in 2021. That would mean a tax cut of $200 for the owner of a $250,000 home in 2020 and $325 in 2021.

• Texas Tribune, May 27, 2019

Currently city and school districts can raise taxes 8% a year without voter approval.

This new bill, passed by the Texas Senate, and now heads to the House, would limit the increase to 2.5% per year.

AUSTIN — Legislation that would slow property tax increases for home and business owners cleared the Texas Senate on Monday, after the sole Republican opponent of the bill stepped aside to allow the vote.

The vote was a victory for Lt. Gov. Dan Patrick, a longtime proponent of property tax relief and champion of the Senate bill. He was again pitted against his political foil, Amarillo Sen. Kel Seliger, the only Republican who openly opposes the bill. Seliger held it up for weeks before changing his mind Monday morning and voting to allow the debate to proceed.

"Today is a historic day," Patrick said after the vote. "We heard a lot of comments from the floor ... from those in opposition who were concerned about cities and counties and their budgets. We're concerned about the people's budget — that's what we're concerned about."

Senate Bill 2 passed 18-12 with Seliger joining the Democrats in opposition. One senator, Brownsville Democrat Eddie Lucio, was present but did not vote. The bill will be debated in the Texas House, which has written its own version of the priority legislation, a week from Wednesday.

Authored by Houston Republican Sen. Paul Bettencourt, a former tax assessor-collector, SB2 would slow property tax growth by limiting how much revenue local governments and school districts can collect each year. It would not make tax bills smaller.

SB2, which was changed on the Senate floor Monday, caps property tax revenue growth for counties, cities and special taxing districts at 3.5% a year, up from 2.5% in the original version. School districts would stay capped at 2.5% a year; however, they are getting a boost of new funding under separate legislation this session.

The cap could be exceeded if taxing districts hold elections and voters approve the increase. Currently, local governments can increase property tax revenue by up to 8% a year without an election.

• Dallas Morning News, April 15, 2019

The six lowest taxed states based on a report from 24/7 Wall Street are as follows:

1. Alaska

• Taxes paid as pct. of income: 6.5%
• Income per capita: $55,646 (8th highest)
• Income tax collections per capita: $0 (tied — the lowest)
• Property tax collections per capita: $2,639 (4th highest)
• General sales tax collections per capita: $0 (tied — the lowest)

2. Wyoming

• Taxes paid as pct. of income: 7.1%
• Income per capita: $55,116 (9th highest)
• Income tax collections per capita: $0 (tied — the lowest)
• Property tax collections per capita: $2,109 (9th highest)
• General sales tax collections per capita: $1,384 (5th highest)

3. South Dakota

• Taxes paid as pct. of income: 7.1%
• Income per capita: $47,834 (22nd highest)
• Income tax collections per capita: $0 (tied — the lowest)
• Property tax collections per capita: $1,301 (24th lowest)
• General sales tax collections per capita: $1,131 (9th highest)

4. Tennessee

• Taxes paid as pct. of income: 7.3%
• Income per capita: $43,326 (18th lowest)
• Income tax collections per capita: $46 (8th lowest)
• Property tax collections per capita: $830 (7th lowest)
• General sales tax collections per capita: $992 (18th highest)

5. Louisiana

• Taxes paid as pct. of income: 7.6%
• Income per capita: $42,298 (13th lowest)
• Income tax collections per capita: $639 (12th lowest)
• Property tax collections per capita: $839 (8th lowest)
• General sales tax collections per capita: $627 (12th lowest)

6. Texas

• Taxes paid as pct. of income: 7.6%
• Income per capita: $46,274 (25th highest)
• Income tax collections per capita: $0 (tied — the lowest)
• Property tax collections per capita: $1,635 (14th highest)
• General sales tax collections per capita: $1,226 (6th highest)
• USA Today, February 23, 2018