While state legislators duke out the details of bills that would cap property tax revenue growth, Waco area leaders are proceeding with business as usual, having been through this type of uncertainty before.
As it stands, Senate Bill 2 requires cities, counties and emergency service taxing districts to gain voter approval before raising 3.5% more property tax revenue than the previous year. Voters may salivate at the thought of the cap, but legislators have said it does not lower anyone’s property taxes, only makes the process more transparent.
Both the House and the Senate have passed versions of the bill, which is set to go to conference committee to iron out the final contents of the legislation. The bill is tied to school finance reform measures also percolating in the Legislature.
But local leaders have expressed their opposition to the property tax reform, saying it will hamper taxing entities’ ability to provide taxpayers with adequate infrastructure, public safety services and other essentials.
McLennan County Judge Scott Felton said he wrote the state lawmakers who represent the area about his opposition to the property tax cap. He said with it the county will not be able to provide the same level of public safety people expect or an economic development fund.
The county has cut its property tax rate four times in the past five years primarily because of higher property values, despite the escalating costs of providing services, Felton said.
Waco Mayor Kyle Deaver has called the cap “arbitrary” and said the measures do not provide municipal tax relief to residents.
City of Waco spokesman Larry Holze said the city is moving forward with preparing its budget without taking the proposed legislation into consideration. He said the city council is aware of the bills but that no major decisions or alternate plans are being made.
“It’s business as usual,” Holze said.
State legislators said property owners often complain about how high property taxes have risen. Rep. Charles “Doc” Anderson, R-Waco, said many property owners have downsized or moved out of their homes because they could not afford the taxes. He voted for the property tax reform bills.
“In a booming economy, we need to allow cities and counties to prosper and do what they need to do while also funding the schools,” Anderson said. “We have to try and see if we can be more fair to property owners, and I think these bills are a step in the right direction.”
Sen. Brian Birdwell, R-Granbury, said in a boilerplate statement that voters have demanded property tax reform and that Senate Bill 2 will have a “significant effect on curtailing the rapid growth in property valuations.”
“SB 2 strengthens voter-approval and provides a balance between both fast-growing, more suburban counties like McLennan and the northern counties that abut the DFW metroplex, as well as the more rural counties in the district,” according to the statement.
Rep. Kyle Kacal, R-College Station, did not return a request for comment. Both Kacal and Birdwell voted for the measures.
Waco Independent School District Chief Financial Officer Sheryl Davis has been paying close attention to both property tax and school finance reform. As the May 27 end of the regular legislative session draws closer, she said she finds relief in the fact that the school district never changed its fiscal year to start on July 1 instead of Sept. 1.
Under the Senate version of the school finance bill, Waco ISD would bring in about $9 to $10 million more than it does right now, with $5 million going toward salary increases, Davis said. The House version would add about $13 million and would leave the district with more flexibility on salary increases.
“We generate less local revenue than we currently do because we’re compressing the tax rate, and that revenue is made up from state coffers,” she said. “Our state share is going up while our local share goes down.”
But Davis said there is some concern that neither bill is adequately funded.
“It’s too good to be true,” she said. “We have not had any new funding for a long time.”