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Where are the stimulus funds for the schools?

Apr 11th, 2021
by Charles Kuffner.
1 comment

Ridiculous.

For more than a year, the federal government has been pumping billions of dollars into school districts across the country to help them meet the demands of the pandemic. Most states have used that pot of stimulus funds as Congress intended: buying personal protective equipment for students and teachers, laptops for kids learning from home, improved ventilation systems for school buildings to prevent virus transmission and covering other costs.

But in Texas, local schools have yet to see an extra dime from the more than $19 billion in federal stimulus money given to the state. After Congress passed the first stimulus bill last year, officials used the state’s $1.3 billion education share to fill other holes in the state budget, leaving public schools with few additional resources to pay for the costs of the pandemic.

Now, educators and advocacy groups worry that the state could do the same thing with the remaining $17.9 billion in funding for Texas public schools from the other two stimulus packages. Because of federal requirements, Texas has to invest over $1 billion of the state’s own budget in higher education to receive the third round of stimulus funding for K-12 public schools. Experts said the state has applied for a waiver to avoid sending that added money to higher education, but the process has caused major delays in local districts receiving funds they desperately need.

“Principals’ budgets are being eaten up with personal protective equipment, with tutoring, with trying to get kids back engaged, while the Legislature is sitting on a whole bunch of money,” said Michelle Smith, the vice president of policy and advocacy for Raise Your Hand Texas. “And that will have an impact on our school districts not just this school year, but for several school years to come.”

A spokesperson for Gov. Greg Abbott told The Texas Tribune that state leaders are waiting for more guidance from the U.S. Department of Education before opening the spigot and letting billions flow down to school districts.

Because of the state’s waiver request, Texas lawmakers likely will not decide how to parcel out the money until they either hear back from Washington D.C., or until the Legislature finalizes its plans for the state budget. But the waiver only applies to the latest stimulus package, so the state could unlock $5.5 billion for education from the second relief bill at any time.

Libby Cohen, the director of advocacy and outreach for Raise Your Hand Texas, said dozens of states are already sending these federal dollars to public schools, and the most recent stimulus package also includes guidance on how to use that money. Texas and New York are the only two states that have provided no additional funding to public schools during the pandemic, according to Laura Yeager, a founder of Just Fund It TX.

“We find it baffling that Texas is pumping the brakes on this particular issue to the extent that it is,” Cohen said. “The dollars are there … and districts need to know if and when they’re coming because they’re writing their budgets right now, and they’re making decisions about summer programming right now.”

Many Texas teachers and administrators say they need money now, and want the Legislature to start funneling the federal funds to school districts as soon as possible.

But state lawmakers holding the most power over budgeting and education funding want the Legislature, instead of local school districts, to decide what to do with these federal stimulus dollars.

“The federal funds will ultimately get to school districts but the overriding question is how should these funds be spent and who should make that decision?” said Rep. Harold Dutton, D-Houston chair of the House Public Education Committee. “I think the primary obligation for educating Texas children vests in the Legislature according to the Texas Constitution.”

I can accept that the Legislature should have oversight of this process, but I don’t accept that they must play the part of approving each allocation. All that does is put a bottleneck on things, at a time when the schools need the funds now. More to the point, it’s not even clear that it will be the Lege making these decisions:

I see even less point to that. There’s a lot of money at stake, not all for the schools, and it makes sense to want to ensure it’s being spent for its intended purposes. But it doesn’t make sense to sit on it and take a lot of time figuring that out, because that money is needed now, especially the money for schools and students.

One more thing to consider: Rising property values, which have fueled an increase in local property tax revenues, have already been used by the Legislature to pay for other things.

Because of the way public schools are funded, a rise in local property tax revenue means the state doesn’t have to send as much money to local school districts. The schools would get the same amount as before — it’s not a budget cut — but the money that might have come from the state comes instead from local school property taxes.

This year, that amounts to $5.5 billion — most of it from property value increases. About 21% of that amount — $1.2 billion — comes from what the Legislative Budget Board called “lower-than-anticipated Average Daily Attendance rates, increased non-General Revenue Funds revenues, and federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funding.”

In plain language, that’s a drop in the average number of students that school funding is based on, money that comes from sources other than state taxes and money from the first round of federal COVID-19 relief.

That last one is a sore spot for local officials, who see the state skimming from a pot of money that was supposed to go to public education. Here’s how that scam works: The money is still going to public education, but the amount the state would have sent is being reduced by the same amount, freeing the state to use money it would have used on schools on some other part of government.

The budgeteers’ word for that is “supplanting” — instead of getting the state money that was coming to them, with the federal money on top, the schools get the same amount of money they’d have received without any federal aid.

Give the schools their money already. There’s no more time to waste. The Chron has more.

The infrastructure bill and the Ike Dike

Apr 5th, 2021
by Charles Kuffner.
Comments are off for this post

This is encouraging.

President Joe Biden’s infrastructure plan sure seems to be considering building the Ike Dike.

His $2 trillion plan includes improving and strengthening infrastructure in coastal areas most vulnerable during hurricane season.

Biden pitched part of the American Jobs Plan on Wednesday in Pittsburgh.

The Biden Administration’s plan includes investing in improving “coastal resilience to sea-level rise and hurricanes.” While specific projects were not named in the plan, the Biden administration says the American Jobs Plan will “protect and, where necessary, restore nature-based infrastructure,” which could include funding the Ike Dike.

[…]

State Rep. Gene Wu, who represents part of Houston, circulated a letter to Biden last week requesting federal support for the Ike Dike. Mayor Sylvester Turner and Rep. Sheila Jackson Lee have also expressed support for the coastal spine.

The Houston Chronicle’s Benjamin Wermund reports that Biden’s plan also includes $50 billion to improve infrastructure strength against hurricanes and other natural disasters, especially in lower-income areas. Biden’s administration used the aftermath of Hurricane Harvey as an example of the need for increased federal support and infrastructure development.

“People of color and low-income people are more likely to live in areas most vulnerable to flooding and other climate change-related weather events. They also are less likely to have the funds to prepare for and recover from extreme weather events,” a statement from the White House says. “In the wake of Hurricane Harvey, Black and Hispanic residents were twice as likely as white residents to report experiencing an income shock with no recovery support.”

I’ll have more to say about the infrastructure plan, which is not yet a bill but an outline and a list of priorities right now, because if it is realized in its full form it would truly do a lot for Texas. That definitely includes the Ike Dike, mostly because it would solve how to pay for it, which I noted a few weeks ago.

To its credit, the Lege is at least thinking about that issue.

A proposed bill in the Texas Legislature would create a regional district with the authority to tax and issue bonds to raise money to build and maintain a $26 billion storm surge barrier on the southeast Texas coast.

The bill, SB1160, is sponsored by state Sen. Larry Taylor, R-Friendswood, with a companion bill in the state House sponsored by Rep. Dennis Paul, R-Houston. The bills would establish the Gulf Coast Protection District, an entity comprised of members from Chambers, Galveston, Harris, Jefferson and Orange counties.

The district would be empowered to operate the long-proposed coastal barrier, once known as the “Ike Dike,” as well as issue bonds and impose taxes to maintain the project. It would also have eminent domain power to seize property or land “for the exercise of the district’s functions,” according to the bill’s text.

During a Monday meeting of the Senate Water, Agriculture & Rural Affairs Committee, Taylor noted that the bill is vital to the Army Corps of Engineers’ proposed coastal barrier project, which aims to protect the region from the kind of catastrophic storm surge experienced during Hurricane Ike in 2008.

“This is a very important bill, and not just not just for the state of Texas, but for our country,” Taylor said. “The number one supplier of military aviation fuel is in this area. So if you’re talking about national security, this area gets wiped out and we don’t have the aviation fuel, that would be a security problem. It’s our number one military port. And it’s our number one petrochemical complex.”

[…]

A final report on the coastal barrier study will be completed in April, according to the Texas General Land Office, which is co-sponsoring the study. The report will released to the public in September and submitted to Congress for final approval.

The Gulf Coast Protection District would be governed by a board of 11 directors appointed by the governor in consultation with the respective commissioners courts from each county. Each of the five counties would have one representative except for Harris County, which, because of its larger population, would have two. The district would also include one representative for the regional ports; one representative for the environmental sector; one representative for the regional industrial complex; and one representative for the cities within the five counties.

The district would have to hold a vote among its member counties before it began collecting property taxes, but will be able to issue bonds.

I don’t know how likely this bill is to pass, but I tend to agree with Campos that this is at best an unwieldy mechanism for funding it. Read that last paragraph and ask yourself how likely it is that the member counties of this district are actually able to raise property taxes for this purpose. For more on what’s in the Infrastructure Plan That Is Not Yet A Bill, see Slate and the Trib.

What the American Rescue Plan means to Houston

Mar 13th, 2021
by Charles Kuffner.
28 comments

First and foremost, no layoffs.

Mayor Sylvester Turner

Houston and Harris County are expected to receive more than $1.5 billion through the stimulus bill approved by Congress Wednesday, providing a massive cash injection that city officials say will help close a budget shortfall widened by the pandemic for the second year in a row.

The measure provides local governments with their most generous round of COVID-related funding yet, and it comes with fewer spending restrictions than last year’s aid. Houston will receive an estimated $615 million, putting the city at more than $1 billion in direct federal relief during the pandemic, while Harris County is projected to receive $914 million — more than double its allotment from the first round of local aid last March.

“I’m hopeful and optimistic that we will be able to use this money to, essentially, bail the city out of a very dire financial situation,” said City Controller Chris Brown, who monitors the spending of Houston’s more than $5 billion city budget.

[…]

Local governments will receive half their federal aid within 60 days of Friday, when President Joe Biden will sign the bill into law, according to White House press secretary Jen Psaki. They will receive the second half of the funds at least a year later.

That means Houston will receive more than $300 million to offset its revenue losses next fiscal year, along with any potential shortfall before the current fiscal year ends June 30. [COVID recovery czar Marvin] Odum said the city finance department is projecting a budget gap of between $160 and $200 million next year, while Brown — whose office generates its own estimates separate from Turner’s administration — said he expects the shortfall to be even higher.

Brown noted that while finance department projections assume the city will see a less-than-1 percent reduction in sales tax revenue this year, the actual decrease has been 7 percent.

“The (Turner) administration, I don’t think, has properly evaluated the reductions in sales and property tax,” Brown said. “There’s a $40 million variance between us and (the) finance (department) in sales tax alone.”

Brown estimated city officials will have to lay off about a dozen city employees for every $1 million trimmed from the budget, meaning Houston could have been looking at more than 2,000 layoffs without any federal aid.

Instead, Houston’s relief will far exceed its budget deficit. The city also is expected to devote a chunk of the aid to direct COVID relief, such as testing and vaccinations. Turner’s administration exhausted the previous round of aid, totaling $405 million, in December. Those funds covered contact tracing efforts, city workers whose jobs were consumed by COVID, and relief to renters and small businesses, among other areas.

As the story notes, the ARP aid comes with fewer restrictions on how the money can be used than the CARES Act did, though the city was able to plug its deficit last year with those funds as well. The need for more funding has been known for a long time, and it’s only happening now because of the Presidential election and those two Georgia Senate runoffs. Elections have consequences, y’all.

Can we please not screw the schools right now?

Dec 6th, 2020
by Charles Kuffner.
13 comments

Really, we don’t have to do this.

Across the Houston region and Texas, school districts that lost enrollment during the COVID-19 pandemic are facing a drop in state funds starting in January if the Texas Education Agency or state lawmakers do not act.

Since the virus began sweeping across the state and nation last March, forcing schools to close, the TEA has given districts several grace periods in which it provided them the same funding they would have received in normal times. To date, that has provided a lifeline to districts that otherwise would have seen their state revenues plunge due to lower-than-expected student enrollments.

The current grace period, which the TEA calls a “hold harmless guarantee,” ends Dec. 31.

The Texas Legislature in 2019 allocated enough money to fund schools at their current levels until the end of the school year, but the TEA has remained mum on whether it will extend the hold harmless guarantee until then. Without another extension for the remainder of the 2020-21 school year, some local district finance officials worry they will be faced with two bad options: dip into and potentially deplete their reserve funds to keep their districts operating through spring, or lay off teachers and staff to make ends meet.

For Houston-area districts, which began the school year missing more than 20,000 students, the financial ramifications could run into the tens of millions of dollars. For example, Alief ISD could lose nearly $40 million after enrollment fell 3,500 short of initial estimates.

Cypress-Fairbanks ISD, which has 2,364 fewer students now than at the end of last year, estimates it could lose $29 million. Aldine ISD could “easily” miss out on $20 million after its enrollment fell 4,000 students shy of projections, and Pasadena ISD would face a shortfall of nearly $14 million due to a 2,261-student enrollment drop.

Houston ISD did not respond to a request for comment, but the district began the year with 13,000 fewer students than expected.

There is no one answer for why students have dropped off schools’ radars. Some may have moved with family in search of work. Parents of pre-kindergarten and kindergarten students may wait to enroll them until school operations are more normal. Others may have been kept at home by parents waiting for COVID infection levels to improve before sending their kids back to school.

Texas Education Commissioner Mike Morath told the Chronicle’s editorial board in November the agency “already provided unprecedented flexibility to offer remote learning, and with it, full funding.”

“However, we know that certain districts face challenges because of significant enrollment declines, and we are working to ensure that our schools and teachers receive the additional financial support we need,” Morath said.

The lack of a concrete assurance that districts statewide will continue to receive funding at current levels has many on edge, said Kevin Brown, executive director of the Texas Association of School Administrators.

“Everybody right now is holding their breath, hoping the state will come through with hold harmless,” Brown said. “But they’re also starting to look at what will happen if that doesn’t come through — are they going to have to do layoffs, and if so, how extensively?”

State Sen. Paul Bettencourt, R-Cypress, said while enrollments remain lower-than-predicted across the state, the situation is improving as the school year plays out and kids come back. He also said he expects more students to return as COVID-19 vaccines begin to be distributed.

Returning funding to the state’s attendance-based formula creates an incentive for districts to keep looking for students who have not shown up.

“You have to balance all these needs, because we have to keep the public school system making sure they make every effort to find students,” he said. “Otherwise children are left behind.”

I mean, look. Schools and school districts and teachers – and parents and students – are contending with a lot this year. They’re doing the best they can under extreme circumstances. While the state of Texas is also under financial constraints, this is exactly the sort of situation for which the Rainy Day Fund – also known as the Economic Stabilization Fund – was created, to smooth out unexpected downturns in revenue and tide things over till they rebound. And for the millionth time, I will note that our state Republican leadership could be loudly demanding that our two Republican Senators support a COVID relief package that gives financial support to state and local governments, including school boards, that are suffering through the effects of the pandemic. There are many things we could do that do not involve putting all the burden on the school districts. We just have to choose to do them.

Flooding affects toll roads, too.

Sep 21st, 2020
by Charles Kuffner.
10 comments

This makes sense to me.

Commissioners Court on Tuesday voted to create a local government corporation to manage Harris County’s toll road system in a move expected to provide a windfall to county coffers and allow surplus toll collections to be spent on non-transportation purposes.

Approved by a 3-2 vote along party lines, the local government model would allow the Harris County Toll Road Authority to refinance its debt at historically low rates and divert funds to help the county respond to the COVID-19 pandemic and subsequent economic downturn, and invest more in flood control, supporters said.

Under the proposal by new Budget Director David Berry, the county will receive a $300 million lump sum in toll revenue and then $90 million annually from the system. The toll road authority collected $901 million in the fiscal year that ended in February.

Peter Key, interim executive director of HCTRA, urged the court in a memo to adopt the new governance model.

“This is an unprecedented situation that presents unique financial challenges for the county and may require additional levels of financial support for the county to effectively respond to these challenges for the foreseeable future,” Key wrote.

The toll road authority’s current bond indenture and state law limit the use of surplus revenues to non-toll roads, streets, highways and related facilities, according to a Q&A created by the county budget office. After refinancing under the new governance structure, HCTRA revenues can be used by other county departments.

The proposal would not affect toll rates, the budget office said, nor would it privatize the system or sell off any assets.

[…]

While Fort Bend, Brazoria and Montgomery Counties use local government corporations to finance and operate their toll roads, Harris County’s will serve as a financing vehicle only. The toll road authority estimates Harris County will save $60 million by refinancing the system’s roughly $2.7 billion debt at lower rates through the corporation.

County Judge Lina Hidalgo said she supported the idea because the county can “maximize every dollar” in a challenging fiscal environment.

Precinct 1 Commissioner Rodney Ellis said diverting some toll revenues would be an effective way to boost flood control spending. It also could be used as matching funds to state or federal appropriations on ambitious capital projects like deepening the Houston Ship Channel.

I’m fine with this. If the toll roads are generating more revenue than is needed to operate and maintain the roads, then sure, let’s use some of that money for other necessary purposes. Flood control would be high on my list, but other capital projects make sense, too. Commissioners Court will still be accountable for all this, as they currently comprise the board of this LGC, and they will be responsible for appointing subsequent board members. Let’s put this revenue to some good use.

(You may say, if the toll roads were bringing in such excess revenue, we should have cut toll rates. I say that’s a policy choice, and my preferred policy would be to do something like this instead. Lowering tolls is pretty far down on my priority list. Your mileage may vary.)

In the “Would you like some cheese with that whine?” department:

Both Republican commissioners voted against the proposal. Jack Cagle in Precinct 4 lamented the fact that there had been no public meetings on the topic before Tuesday’s vote, unlike the extensive campaign in the summer of 2018 seeking support for the $2.5 billion flood bond program.

Precinct 3’s Steve Radack derided the idea as a ploy by the court’s Democrats who, in his view, are looking to siphon money from the toll road authority instead of asking taxpayers for more.

“This is a money grab,” Radack said. “They’re going to use it to pay for things that are normally paid for via (property) taxes.”

Hey, remember when Commissioners Radack and Cagle broke quorum to prevent the democratically-elected majority on Commissioners Court from voting on a property tax rate hike that was intended to cover future downturns in revenue resulting from COVID-19 and the state’s rigid new revenue cap? Good times, good times. Maybe let the majority vote on its policies next time, and campaign against them on the places where you have disagreements? Just a suggestion.

Revisiting the May elections

Aug 2nd, 2020
by Charles Kuffner.
Comments are off for this post

I’m ambivalent about this.

Most cities in Texas — from Galveston to Lubbock — moved their May elections to November under a pandemic-era decree by Gov. Greg Abbott.

But the choices facing voters will remain limited to candidates who filed for office months ago — at least for now.

State Rep. Mayes Middleton, a Galveston County Republican, wants to reopen the filing period for candidates to lead cities and other political jurisdictions, including school boards. He believes voters may have soured on incumbents facing little or no competition.

Middleton is asking Attorney General Ken Paxton whether the state should give candidates who want to run in a postponed local election until mid-August to file for a spot on the ballot.

“I think it’s also only fair that this occur because there are a lot of people that have been frankly unhappy with how some of the decisions… have been made in local government during this pandemic,” Middleton said.

The legal rub: Abbott’s March 18 order was silent on the filing deadline. But Abbott’s secretary of state, Ruth Hughs, wrote local officials that “the postponement does not have the effect of reopening candidate filings.”

Middleton believes that guidance is not supported by election law and Abbott’s order. Middleton, who chairs the arch-conservative Texas Freedom Caucus, contends in his July 2 letter to Paxton that Texas law clearly states that if the election day is changed or moved, the filing period rolls forward with it.

He said the ripple effects of a legal opinion by Paxton go well beyond proving greater scrutiny for elected officials who have issued shutdown orders or mask requirements, which have drawn the ire of many conservatives. Some local officials believe that tax rates adopted by cities for the coming fiscal year could greatly exceed what voters have the appetite for amid curtailed local tax revenues due to the pandemic.

I mean, I don’t agree with Mayes Middleton on much, and I think his motives for this action are screwy. But I confess that a part of me thinks that an election held in November, even if it was supposed to have been held in May but had to be postponed for whatever reason, should have a filing deadline that’s standard for a November election. On the other hand, the original filing deadline for the May 2 elections was February 14, more than a month before Abbott’s order that rescheduled the thing. As such, it’s hard to argue that people may have been unfairly excluded from filing. Obviously, conditions have changed, and I think there’s a valid case to be made that if these elections had been scheduled for November in the first place, there would be a very different lineup for them than what exists now. I think you can also make a valid case that the voters have it in their power to persuade the candidates they do have to prioritize the things they want now, as opposed to the things they would have wanted then.

On the related question of whether we should have regular elections in May at all, I’m also ambivalent. No question, turnout would be much greater in November elections, and as a general principle I think that’s preferable. But November elections, especially November elections in even-numbered years, are full of races with a lot more money and noise-making ability, which combine to drown out whatever local issues would be heard in a quieter context. It would be so much better if people simply took a greater interest in their local and school board elections, so that they could be held at any time and didn’t need the boost of a Presidential or gubernatorial election to get even semi-decent participation. I’d like to have a robust debate about this, but I fear that only the hardcore, vote-in-every-election types would be tuned in for it, and that would miss the point entirely. I don’t know what else to say.

One more thing:

Republican Cheryl Johnson, the Galveston County tax assessor, wrote Paxton in support of Middleton’s position. She said the pandemic has “opened the eyes” of Texans to potential government overreach, namely local tax rates that could soar as cities try to bridge budget shortfalls. Johnson wants officials considering tax hikes to feel the pressure of a campaign challenge.

Johnson noted that Senate Bill 2, signed into law by Abbott during the 2019 legislative session, requires cities to receive voter approval before levying taxes that would result in collections 3.5 percent higher than the previous year. But the bill contains a disaster provision that permits a city to collect more than twice as much for at least two years if any part of the city is declared a disaster area during the current tax year.

State and local officials are at odds over whether the coronavirus pandemic qualifies as a “disaster” to trigger this provision.

“I’m of the opinion that COVID-19 is not the type of disaster that would warrant the disaster provision of Senate Bill 2,” she said.

The Texas Municipal League says it conducted a survey of cities recently and found the “vast majority” plan to keep increased collections below the 3.5 percent threshold allowed by Senate Bill 2.

Yeah, sorry, if you don’t think what we’re in now counts as a “disaster”, then I’m afraid I just can’t take you seriously. SB2 was a terrible bill for many reasons, and this is one of them. But look, if you don’t want cities and counties to try to deal with their massive revenue shortfalls on their own, then there is a simple alternative, and that’s to push the Senate to pass the HEROES Act, which the House passed months ago, to provide fiscal relief to local governments for precisely this purpose. If you’re not down for that either, then I think we know all we need to know about your priorities.

The rough fiscal road for school districts

Apr 25th, 2020
by Charles Kuffner.
Comments are off for this post

It’s gonna be bad. How bad remains the question.

Coronavirus already has wreaked havoc on school districts — closing campuses for the remainder of the school year, shifting learning online, and exposing a wide digital divide between students who have ready access to the internet and those who do not. And that is only this year.

Next year, even if the restrictions are lifted, the coronavirus still could spark a budget crisis for traditional and charter school districts across Texas.

School finance officials and state leaders already are warning that the economic disruption caused by the pandemic, coupled with the ongoing oil slump, could result in a plunge in state revenues as sales taxes drop and commercial property values slip. Texas Comptroller Glenn Hagar already has said the state is in a recession.

As districts work to finish their 2020-2021 budgets for approval this summer, Rep. Dan Huberty, R-Humble, said it would be prudent for them to squirrel away some money, even if it is too early to tell how much of an impact the pandemic will have on funding next year.

“Talking to superintendents, my message to everybody is, let’s get through this year, let’s get to summer time, and next session we’ll need to watch things very closely,” Huberty said.

[…]

[2019 school finance reform bill HB3] requires districts to base their upcoming budget on current year property values, instead of the previous year’s values. Districts receive a larger infusion of state money too, but the rate at which they can tax local property owners effectively will be capped by the state, said Catherine Knepp, an associate at the Moak, Casey & Associates school finance consulting group. How much local tax rates have to be lowered depends on the rate local property values rise and several other factors.

“Districts were still figuring out how to do that,” Knepp said, “Then enter coronavirus.”

For local revenues, Knepp said districts most likely to be impacted by the coronavirus closures will be those in which a larger share of their tax bases are commercial or industrial property rather than residential. About 60 percent of Deer Park ISD’s tax base, for example, comes from industrial properties that could suffer if the oil slump continues or if businesses there shut down entirely.

[…]

Huberty said the Legislature plans to save $1 billion of federal stimulus money for the next session to help fund schools and other parts of the state’s budget. Although it is too early to tell how much damage could be done as businesses and much of public life remains closed, he said money could be tight next session and said superintendents should begin looking where they could trim their budgets.

“The bones of what we put together with HB 3 remain intact, and we got some stimulus money from the feds to help us out with next year,” Huberty said. “But we’re going to have to look at everything.”

It’s a whammy from multiple fronts, as state revenue as well as local property tax revenues will be down, and the deep drop in oil prices will mean the Rainy Day Fund isn’t as topped up as it has been lately. On top of all that, when local revenues do start to recover, they will have to deal with the cap imposed by HB3. Which, as I understand it, does have an exception for things like epidemics, though who knows how that will play out. Even if everyone agrees to waive the restricting revenue cap, even the previously existing one could force tax cuts at a time when the districts are starved for funds. This will be an issue for multiple Legislatures, not just the 2021 Lege. It’ll also be a fine how-do-you-do for the TEA-appointed Board of Managers in HISD, whose first task (assuming they eventually get seated) will be dealing with the expected ginormous budget hole. Bet all those people who applied for the position a couple of months ago are having second thoughts now.

Another review of Judge Hidalgo’s first year

Mar 22nd, 2020
by Charles Kuffner.
7 comments

Though, oddly enough in a story about Harris County Judge Lina Hidalgo’s first year in office, most of the text is about outgoing Commissioner Steve Radack and the two-year-long temper tantrum he’s been throwing.

Judge Lina Hidalgo

For many years, the Harris County Commissioners’ Court, which oversees the third most populous county in the country and one of its most diverse, had been a place of easy consensus. At the time of Radack’s outburst, four of the five members of the commissioners’ court were white Republican men. They included county judge Ed Emmett, a popular moderate in a party running out of them. Most sessions passed by with the placidity of a koi pond. By cheering activists who sued the county and asserting that commissioners were supporting a racist policy while simultaneously trying to join their ranks, [Commissioner Rodney] Ellis was cannonballing into the water.

Three years later, in July of 2019, Radack looked considerably more chastened when the newly elected Ellis and the rest of the commissioners’ court met to vote on a settlement to the lawsuit—a sweeping $100 million overhaul that largely abolished the practice of jailing misdemeanor defendants who can’t afford cash bail. Reformers across the country hailed it as a major step toward making the criminal justice system fundamentally more equitable. The settlement was possible only because, just eight months before, Harris County voters had handed control of the commissioners’ court to Democrats for the first time since 1990. Radack and Jack Cagle were now the only two Republicans left on the court. Most astonishingly, voters had seen fit to replace Emmett, the beating heart of the county’s political establishment for more than a decade, with Lina Hidalgo, a 27-year-old Latina who had moved back to Houston to run against the 69-year-old Emmett. She was the first woman and Latino to lead Harris County.

Now Hidalgo and the other two Democrats—Ellis and former Harris County sheriff Adrian Garcia—ran things. For years, meetings had rarely lasted an hour. Under the new management they felt like committee hearings in the state legislature, often going for more than five hours and sometimes as long as nine, as the new majority pushed to enact its agenda—criminal justice reform, bringing transparency to county government, and improving flood planning—while members of the public came to support, oppose, and debate.

At the July meeting, Hidalgo beamed as she introduced the bail-reform settlement to the court. “This is a proud beginning,” she said, in the fight to build a criminal justice system in which “fairness and justice are preeminent.” She quoted from Martin Luther King Jr.’s 1963 address on the National Mall. She exuded, as members of her generation would say, good vibes only.

Ellis, a political operator who served 27 years in the Texas Senate, spoke glowingly too, calling the settlement, somewhat hyperbolically, “just as big as” Brown v. Board of Education. But the most dramatic moment came when he moved closer to his mic and stared at the side of the room where Radack and Cagle sat. “A very oppressive system has existed for decades,” he said. “And I don’t point an accusative finger at anyone, but it did, I think, indicate a certain blind indifference to what was going on. I think it’s incumbent on us to admit that,” he said, slowing for emphasis.

When it was his turn to speak, Radack turned to address the packed chamber, where during the period of public comments, most had spoken in support of the settlement. He understood that there were racial injustices in the system, he said.

But then he began pounding his palms on the wood in front of him. “This is a public table,” he said, his voice rising to a shout. Issues such as bail reform were supposed to be discussed in public, “not [by] a few people from the commissioners’ offices and whomever, behind closed doors . . . sitting there and discussing what they’re going to do for all of us.” He stood up, getting angrier and flipping through the lengthy settlement for the audience. “Every single page says ‘Draft,’ ‘Confidential,’ ” he said. “I think that sucks!”

Hidalgo politely noted that the text of the settlement had been made available to the commissioners three days earlier. “And let’s be careful with the public table,” she said. Radack was learning something Ellis knew very well: It’s not fun to be in the minority in a lawmaking body. “There are consequences to elections,” Ellis added calmly. At the end of the year, Radack announced he was retiring, boosting Democrats’ chances of electing the fourth Democrat to the commissioners’ court this November—and giving them the same level of dominance Republicans enjoyed just a few years ago.

[…]

Now in the minority, Radack and his fellow Republicans have found other ways to show their displeasure. For one, they’ve made a lot of noise. At one meeting regarding transportation funding, Cagle brought copies of George Orwell’s dystopian novel 1984 to distribute to the audience, accusing Hidalgo’s court of engaging in doublespeak.

But the most important scuffle came in October. The commissioners met to pass a tax hike that would increase the county’s revenue by 8 percent before an annual deadline, citing the need to raise money before new laws passed by the state legislature went into effect that would restrict their ability to do so in the future. Cagle and Radack didn’t show up—depriving the court of a quorum and preventing a vote. (State law requires that four of the five members of county commissioners’ courts be present to vote on tax increases.) Hidalgo says the consequences of that missing revenue will hurt the county in the long run. “You won’t see a huge difference from one year to the next,” she said, “but it will compound over time.”

That anti-majoritarian maneuver is one reason why many Republicans in Austin are closely watching what’s happening in Harris County. Never huge fans of cities and counties to begin with, GOP lawmakers, led by several Houston-area Republicans, cracked down hard on local government during the 2019 session.

Now imagine if the Democrats tighten their grip on Harris County, finally flip Fort Worth’s Tarrant County (the last urban Republican holdout), and take over quickly growing suburban counties like Hays (south of Austin) and Fort Bend (southwest of Houston). Then they draw new county commissioner precincts to solidify their control. In this dark future for conservatives, Republicans in the Legislature work even harder to rein in Hidalgo and her colleagues across the state.

If Democrats can pick up Radack’s seat, only one Republican would remain on the commissioners’ court, which would prevent that Republican from breaking the quorum again. But what if the Legislature, learning from Radack’s example, changed the law to require all five members of the commissioners’ court to be present? Many blue counties, even the big Democratic ones like Dallas and Travis, have at least one Republican commissioner who could, if the law were changed, nullify the wishes of the other four and hold one-person veto power over budgetary matters, with huge consequences for local governments across the board. “That would be a pretty major thing,” said Radack, who’s given the issue a good deal of thought. “Probably one of the most major pieces of legislation to come around in a long time.”

I should note, this story was written, and I wrote my draft post of it, before coronavirus took over all of our lives. It should be clear that every politician going forward will be judged on how they performed during this particular crisis. I think Judge Hidalgo is doing quite well on that score so far, but we still have a long way to go. Now here’s what I wrote when I first blogged about this.

Putting Radack’s jackassery aside, I’ve been thinking a lot about what might happen in the near future as Republicans continue to lose their grip on the larger counties and maybe possibly could lose control at the state level. We saw what they did on the way out the door in states like Wisconsin and North Carolina, after all. Imagine if Dems do take over the State House this November. Would Greg Abbott call a special session to get one last shot at passing bills in a full-GOP-control environment? Maybe even take some action to clip a future Democratic Governor’s wings? He’d want to act now and not wait till his hypothetical loss in the 2022 election, because if there’s a Dem-majority House, he’s out of luck. For sure, the assault on cities and counties will be much harder to pull off without a Republican monopoly. The good news for us Dems is that it would be hard for Republicans here to make like their counterparts in WI and NC, but not impossible. We need to be thinking about this, and have some strategies prepared for just in case.

Anyway. To reiterate what I said before, I think Judge Hidalgo has done a very good job, and has positioned herself and the Court to do a lot more good this year. It’s not necessary to trade out Radack for a better model – that 3-2 majority is fine almost all the time – but it would help. And Lord knows, the man has had more than enough time in the spotlight. Move along, already.

(By the way, Fort Bend has already flipped. In the same way that Harris did, by Dems winning one Commissioner’s Court seat and the County Judge’s office, to go from 4-1 GOP to 3-2 Dem. And as with Harris, Fort Bend Dems have a chance to win a Republican-leaning set this year to get to 4-1 in their favor.)

City wins final judgment in revenue cap lawsuit

Nov 1st, 2019
by Charles Kuffner.
Comments are off for this post

Wow, is this ever a blast from the past.

The city of Houston has prevailed in a lawsuit challenging the amount it can collect in property taxes, ending 14 years of litigation over a set of measures approved by voters in 2004.

At issue in the suit were two ballot measures from 2004, specifically Proposition 1, which limited the annual increases in property tax and utility revenues to the combined increases in population and inflation for Houston, or 4.5 percent, whichever is lower.

Prop 1 was approved by voters in 2004, as was was another measure, Proposition 2, that further limited the city’s ability to collect revenue. The city, under then-Mayor Bill White, abided by the first measure because of a directive in it that stated whichever cap received more votes would be the one adopted.

Individuals from a conservative group then filed suit, accusing the city of violating the caps by not also adopting Proposition 2.

After years of court battles, a state district judge has ruled that the city has “fully complied” with Proposition 1.

See here for the city’s statement. The most recent update I can find in my own archives is from 2008 (!!), though it is likely there has been more action on the lawsuit that either wasn’t reported or went unremarked upon by me. However you look at it, this is some old, old business, and now it is done. Think of it as an alternate thing the city of Houston can celebrate now that the World Series didn’t work out the way we’d hoped.

Another ReBuild Houston lawsuit

Oct 26th, 2019
by Charles Kuffner.
7 comments

Gotta say, this puzzles me.

Mayor Sylvester Turner

A pair of Houston residents filed a lawsuit against Mayor Sylvester Turner and city council Monday, accusing them of failing to follow the will of voters who approved a charter amendment last year for funding drainage and street repairs.

The lawsuit accuses city leaders of shortchanging the dedicated drainage fund by failing to transfer the full amount required by last year’s ballot proposition.

The proposition, which essentially was a “do-over” vote on the city’s 2010 street and drainage repair program known as Rebuild Houston, requires the city to dedicate 11.8 cents of its property tax rate to the street and drainage fund. The city, under former mayor Annise Parker and Turner, has transferred less than the full amount generated by the 11.8 cents for the last five years.

The plaintiffs allege a roughly $44 million discrepancy in what the city currently has budgeted compared to the amount generated by 11.8 cents of property tax rate. Over 10 years, the funding shortfall could exceed $500 million, the plaintiffs say.

Turner’s office issued a statement disagreeing with the premise of the lawsuit, saying that transferring the full amount generated by 11.8 cents of tax rate would require moving some $50 million more annually and would “cripple” city services.

“That would mean cuts to essential services like police, fire, solid waste, and other services,” the statement said. “Mayor Turner doesn’t support that.”

The plaintiffs, Allen Watson and Bob Jones, are engineers who were part of the campaign that put the program, then known as ReNew Houston, on the 2010 ballot. It later was renamed Rebuild Houston.

They said they were suing because the city had failed to meet the expectations outlined in Proposition A, which 74 percent of voters approved last year. They are seeking a court order to force the city to direct more money and “to fund the things they said they were going to fund,” Jones said.

“Houstonians spoke loud and clear just one year ago when they voted to create a fund to fix our streets and drainage,” Jones said in a later statement. “…We are undertaking this suit to ensure that the law is upheld, that the promised funding is protected so that our street and drainage infrastructure receives the investment necessary to repair, replace and upgrade our street and drainage systems throughout the city over the next 20-30 years.”

Here’s what I wrote in 2018 about the ReBuild re-vote. You can click the links to the Chron stories, but there’s nothing in either of them that mentioned a percentage of property taxes. The story mentions this was a part of the original mix of funding for ReBuild Houston, and here I have to confess I don’t remember that. There was so much noise and drama about the drainage fee that anything and everything else got overpowered. If this is what’s supposed to happen, then the consequences will be unpleasant. On the plus side, maybe it’ll take another decade to get settled via the courts.

Cagle and Radack break quorum

Oct 9th, 2019
by Charles Kuffner.
2 comments

They did it.

Two Harris County Commissioners Court members skipped Tuesday’s meeting to prevent the Democratic majority from voting on a property tax rate hike that would increase revenue by 8 percent.

Republican commissioners Steve Radack and Jack Cagle were absent when County Judge Lina Hidalgo gaveled in the session at 10:03 a.m. A staff member for Cagle placed a two-foot stack of constituent comments at his place on the dais, indicating their widespread opposition to the tax increase.

Without a vote, Harris County will revert to the effective tax rate for the upcoming fiscal year, which will collect more than $195 million less than the rate Democrats had proposed, according to county budget analysts.

[…]

Cagle and Radack remained at large when their colleagues began discussing the tax rate at 11 a.m. In a statement, Cagle said he and Radack skipped the meeting to block an “unwise, unfair and unjustified” tax increase.

“The residents of Precinct 4 elected me to represent them. They did not elect me to lord over them or to repress them,” Cagle said. “This is the taxpayers’ money, not the government’s.”

See here and here for the background, and here for a statement from Commissioner Ellis. I will just say this: The people of Harris County, who voted 52-46 for Lupe Valdez over Greg Abbott, and 56-42 for Mike Collier over Dan Patrick, did not vote for the imposition of a restrictive and damaging revenue cap. Collier, for that matter, carried Radack’s precinct and came damn close in Cagle’s, so one could plausibly argue that their own constituents didn’t vote for that revenue cap, either. I can appreciate that Radack and Cagle opposed this plan and used the tool that was available to them to stop it, but they picked a really short-sighted hill to die on. The property tax system in Texas is rigged against homeowners, and Radack and Cagle’s fellow Republicans in the Legislature refuse to do anything about it. By this action, they demonstrate they are part of the problem. Commissioners Court can’t do anything about what the Lege has imposed on them now, but the voters can do something about Steve Radack next year. The Court has undergone a lot of change, but clearly more is needed.

Will Radack and Cagle break quorum to stop a tax rate hike?

Oct 8th, 2019
by Charles Kuffner.
9 comments

We’ll find out today.

Harris County Commissioners Court has scheduled a vote Tuesday to hike property taxes by 8 percent, though the two Republican members can thwart the plan by simply skipping the vote.

A quirk in the Texas Government Code requires a quorum of four court members, rather than the regular three, to vote on a tax increase. The rule affords Republican commissioners Steve Radack and Jack Cagle rare power, as they repeatedly have lost votes to their three Democratic colleagues this year.

The pair said they would not reveal their intentions ahead of the meeting.

First Assistant County Attorney Robert Soard said Radack and Cagle could attend the rest of Tuesday’s court meeting and leave the room when County Judge Lina Hidalgo decides to consider the tax increase.

“They can be present for part of the meeting and then leave,” Soard said. “That’s their option.”

Soard said that unlike the governor, Hidalgo has no power to compel any member to be present for a vote.

[…]

The Democrats on the Harris County Commissioners Court proposed a property tax increase of 2.26 cents per $100 of assessed value, which the county budget office estimates would add $37.65 to the tax bill on a $230,000 home in the first year. The county would collect more than $200 million in additional revenue.

Garcia said the prospect of Republicans skipping the vote was “disappointing but not surprising.”

“It is their responsibility to come to court and be a part of the process, even if they don’t agree with it,” he said in a statement.

The relationships between court members have been fraught at times since Democrats took control in January. Divided votes have become the norm, and commissioners sometimes snipe at each other from the dais.

See here for the background. The main thing I would add here is that the fraught-ness and the sniping and the divided votes are not because of some generic notion of “politics”, or incivility, or even partisanship, as former Judge Robert Eckels says. It’s about a sincere and significant difference in values and priorities. Which, to be fair to Eckels, is reflected in the differences between the two parties. The Republicans had their way for decades, and then the voters voted for change. That’s how this is supposed to work, minus the anti-majoritarian avoidance techniques. We’ll see what these two do.

Do you believe in magical thinking?

Sep 24th, 2019
by Charles Kuffner.
15 comments

I did not read this long profile of Tony Buzbee, because life is short and we all have better things to do. I did briefly scan the print version a bit, and in doing so I noticed the following paragraph, which tells you everything you need to know about Tony Buzbee, Loudmouth Rich Guy Who Wants To Be Mayor:

Buzbee opposes the idea of lifting Houston’s property tax revenue cap. Instead, he wants to enact budget cuts he says will fund his proposals, such as hiring 2,000 police officers in eight years — which would spike the department’s budget by almost 40 percent — and granting firefighters pay parity with police.

This is impossible. It literally cannot be done. Do you remember when Mayor Annise Parker was faced with a big deficit in 2010 following the economic crash, which caused property tax revenues to plummet? She ran on a promise of balancing the budget without making any cuts to the police or fire departments, and she achieved that in large part by laying off over 700 municipal employees. Someone with a more detailed knowledge of the current budget would have to run the numbers to check this, but to hire that many new police officers and give the firefighters a raise of that magnitude, I would question whether there are enough municipal employees left to lay off to pay for it. I mean, if we don’t want trash collection or a permitting department or building inspectors or anyone working in the parks and libraries – and maybe if we also defaulted on our bonds – you could make it work. I guarantee you, Tony Buzbee has not done the math to show how he could make it work.

On a side note, let me refer you to this:

Houston Police Officers’ Union President Joe Gamaldi questioned whether the department would even have enough cars, uniforms and equipment to handle the increased headcount.

“We would love to see that type of growth,” Gamaldi said. “But realistically, we’ve never hired more than 375 people in a fiscal year, so we would really need to look to see if HPD’s infrastructure can even handle that.”

Note that this story has Buzbee hiring those two thousand cops over his first four years. I mean, when the president of the police officers’ union says that your plan to hire 500 cops a year every year for four years is a bit much…

Other counties also considering property tax rate hikes

Sep 23rd, 2019
by Charles Kuffner.
1 comment

I have four things to say about this.

A statewide property tax relief plan that takes effect next year is prompting hefty tax increases this fall in many of the biggest cities and counties in Texas, even in places that have historically kept rates flat or decreased them.

Elected officials in some cities and counties say they have no choice but to raise taxes as high as they can this year to brace for the implementation of property tax reforms that Republican Gov. Greg Abbott and the Texas Legislature called historic earlier this summer. The average effective tax rate for single-family homes in Texas was 2.18 percent in 2018, third-highest in the nation, according to a study by ATTOM Data Solutions.

Starting next year, cities and counties will be barred from increasing property tax collections more than 3.5 percent in any year without a vote of the public. Currently, the state has an 8-percent limit, called the rollback rate, that state lawmakers say has allowed cities and counties to overtax homeowners. The lack of a state income tax makes Texas municipalities especially reliant on property tax revenue.

A look around the state shows many counties and cities are pushing rates to the 8-percent rollback rate this year to bank money or, in a few cases, even to fund pay raises for themselves, in reaction to the new law. El Paso, Harris, Tarrant, Webb and Travis counties are among those pushing to the current rollback rate, or near it. And cities including El Paso, Arlington, Corpus Christi and Austin are similarly considering rates at or near the 8-percent limit.

“I think a lot of cities and counties know that we are putting them on a diet and they are going on one last bender before it happens,” said State Rep. Dustin Burrows, R-Lubbock, who was a key player in crafting the property tax reforms as the leader of the House Ways and Means Committee.

[…]

In Harris County, which hasn’t raised the tax rate in decades, county officials say the state’s new restrictions are forcing them to react by raising the tax rate by 2.26 cents per $100 of assessed value. County Judge Lina Hidalgo said the county needs to create a contingency fund to ensure it can pay for services, such as health care, transportation and flood control, once the state’s 3.5-percent cap goes into effect. The rate increase, if approved next month, would allow Harris County to collect more than $200 million extra in tax money than last year.

1. There are some extremely bitchy quotes in the story from Sen. Paul Bettencourt, who pushed the bill that led to this in the Senate. I may have rolled my eyes so hard that they will never unroll.

2. The counties and cities that are considering this are acting in what they believe is their best interest, and the best interest of their residents. Plenty of expenses that counties and cities face, from disaster relief to health care to salaries and pensions, aren’t subject to any kind of rate limit. HB3 radically changed their long term financial picture. They had no choice but to adjust.

3. Just as a reminder, there are plenty of things the Legislature could have done to improve our property tax system without putting the squeeze on local governments. The Lege could also greatly help counties on the expenditure side of the balance sheet by expanding Medicaid, which would do a lot to reduce the cost of health care on counties. The whining from the likes of Bettencourt on this is just beyond rich. All that is without even pointing out that having a property tax-based system, in which the main expense is completely disconnected from people’s annual incomes, instead of an income tax-based system, is always going to have problems like this.

4. The same voters who will be given the power to approve or reject future tax collection levels also have the power to approve or reject the local officials who may be raising tax rates now ahead of that. They also have that power over people like Paul Bettencourt and Dustin Burrows and Greg Abbott and so forth. Maybe some day that power will be exercised.

Quorum question

Sep 20th, 2019
by Charles Kuffner.
5 comments

Who knew?

A quirk in Texas law could allow the two Republicans on Harris County Commissioners Court, despite being in the minority, to prevent the three Democrats from enacting a proposed property tax increase.

Typically, three court members constitute a quorum, the minimum number needed to conduct business. The Texas Government Code, however, requires four members be present to vote on levying a tax.

That exception affords rare power to Republican commissioners Steve Radack and Jack Cagle, who have been steamrolled on 3-2 votes on enacting bail reform, appointing a judge and a resolution on gun violence.

The pair simply would need to skip a tax hike vote to prevent the three Democrats from passing it, First Assistant County Attorney Robert Soard said. The trio on Sept. 10 proposed raising the overall property tax rate 2.26 cents per $100 of assessed value. The existing rate is 63 cents per $100 of assessed value.

“We don’t know how exactly it would play out,” Soard said. “But if there are not four members present, Commissioners Court can’t vote on a tax increase.”

A final vote is scheduled for Oct. 8, and the deadline to set the county tax rates is Oct. 11, leaving the Democrats with little margin for error. Commissioners Court has scheduled public hearings on the proposal on Sept. 20 and Sept. 24.

Radack pointed out that he has not missed a meeting in more than five years, and said Oct. 8’s session is marked on his calendar.

Cagle, through a spokesman, said he has made a decision on the issue but does not want to share his strategy publicly. Cagle proposed a compromise at the Sept. 11 meeting, only increasing the flood control district rate, but his motion was defeated on a party-line vote.

[…]

The proposed property tax increase, which would be the first increase since 1996, would collect more than $200 million in additional revenue over the current rate. Hidalgo said the measure is necessary to ensure the county can continue to pay for services, including billion in flood control projects, after the revenue cap passed by the Legislature takes effect next year.

That cap limits year-over-year growth of city and county revenue to 3.5 percent, down from a previous ceiling of 8 percent. Revenue increases above that threshold would need voter approval.

The county budget office estimates the average Harris County homeowner’s tax bill would increase by $38, based on a home valued around $230,000.

You have to love an anti-majoritarian law. I had no idea this existed, but I can’t say I’m surprised. Let’s please dispense with this nonsense about Radack and Cagle being “steamrolled”, however. They’re on the losing end of majority votes. That’s how this is supposed to work.

The story notes that Rodney Ellis participated in a big quorum break in 2003, while he was in the State Senate and was trying to hold off the Tom DeLay re-redistricting effort. The Senate quorum-busting, which lasted for weeks while Ellis and his Democratic colleagues holed up in New Mexico, followed a similar effort by 51 Democrats in the House. This is fair to bring up. I will note that in these cases, the threshold for a quorum in each chamber was set by the rules they adopted at the beginning of the session, not by state law, and that one of the things that happened as a result of all this was that the quorum rules were changed to make this kind of exercise futile. Also, the reason that Ellis and others fled the state is because the DPS is authorized to round up wayward members and drag them back into the chamber for the vote they’re trying to scuttle. Whether the DPS has the power to place quorum-busting legislators under arrest was unsettled the last time I checked on it, but I feel confident saying that if Radack and Cagle try this, they will not be hauled back downtown in handcuffs by Sheriff’s deputies.

As to the matter of the tax rate increase itself, this is something that Judge Hidalgo and Commissioners Ellis and Garcia think is necessary to enable the county to pay for the things it needs to do, including flood mitigation. They are concerned that thanks to the revenue cap provision of HB3, the county will be hamstrung going forward, forced to implement rate cuts because the county’s growth has been too fast for the law, so they’re taking action to mitigate against that now. You can certainly disagree with that, and you can express that at the next Commissioners Court meeting and at the ballot box. I’d just note that if the Legislature had left the county to its own devices, this wouldn’t be happening now.

Ed Emmett is not a fan of SB2

Jul 10th, 2019
by Charles Kuffner.
5 comments

So he opines.

Ed Emmett

At its core, SB 2 continues state leaders’ war against local governments. For years local governments have had to make up for the state’s underfunding of public education. But the state’s top elected officials, Gov. Greg Abbott and Lt. Gov. Dan Patrick, didn’t want the public to understand that those state budget decisions were the main reason property taxes were going up. So they criticized city and county policies.

In its final form, SB 2 limits revenue growth from property taxes for cities and counties to 3.5 percent annually. School districts are limited to 2.5 percent, although implementation for school districts is delayed for two years so that for now, the state won’t have to pay an even higher share.

The bill fails to recognize that Texas counties differ widely, so an arbitrary, one-size-fits-all approach is bad policy for a county such as Harris, where almost 2 million people live in the unincorporated part of the county and so rely on county government to provide roads, flood control, parks and other infrastructure — as well as law enforcement.

To make matters worse, the state has saddled counties with unfunded mandates, particularly in criminal justice and courts. The bond rating agencies have already issued warnings that the legislation might cause Texas local governments’ credit ratings to be downgraded, which will increase the amount of interest that taxpayers pay.

So when county services or infrastructure lag behind growth, don’t blame county government. Blame the state officials who supported SB 2.

Beyond the impact on local governments, SB 2 is actually bad for homeowners because it keeps in place a complicated, convoluted property tax system. The big winners from the so-called property tax reform are property tax consultants and their clients.

It is not a coincidence that the author of SB 2, Sen. Paul Bettencourt, makes his living as a property tax consultant. Bettencourt even had the audacity to advertise his services on the radio during the legislative session while SB 2 was being considered.

Sick burn, y’all. There sure is a certain freedom in not having to run for re-election. Emmett is of course correct about the main purpose of SB2, but let’s not overlook the side benefit.

A look at the Constitutional amendments we will see this November

Jul 6th, 2019
by Charles Kuffner.
3 comments

There are ten of them, including a couple I will vote against as hard as I can.

House Joint Resolution 4 would let the Texas Water Development dole out dollars from a flood infrastructure fund — created by Senate Bill 7, which would spend $1.7 billion from the rainy day fund — to be used for planning, seeking permits for or constructing flood-related projects. SB 7 is awaiting Gov. Greg Abbott’s signature.

If approved by voters, the flood infrastructure fund would be created at the start of next year.

HJR 34 would let the Legislature temporarily lower tax rates on property damaged during a disaster declared by the governor. House Bill 492 would set the initial tax exemption rates, up to a full exemption, according to the extent of the damage.

HJR 38 would ban the creation of a state income tax, doubling down on a constitutional amendment approved by voters in 1993 that requires voters’ permission for the Legislature to create a state income tax.

[…]

HJR 95 creates a tax exemption for precious metals held in the Texas Bullion Depository, which opened in North Austin in June 2018 with its permanent location in Leander expected to open in December.

While that depository made Texas the only state to have a state-operated depository, HJR 95 author Rep. Giovanni Capriglione, R-Southlake, said it is at a competitive disadvantage because it is also the only state allowing local property taxes on precious metals.

HJR 72 intends to ease the pressure put on smaller communities to find municipal judges by allowing one person to be elected to multiple cities’ judgeships. Currently a person can only hold multiple municipal judgeships by being appointed to each one.

Senate Joint Resolution 32 would let police dogs and other law enforcement animals retire in their old age to live with their handler or other caretaker. The state constitution currently prevents law enforcement from transferring valuable property to a private person or organization for free.

The other four are HJR12, HJR151, SJR24, and SJR79, all of which are financial in nature. As you know, I’m going to cast an enthusiastic but almost certainly futile vote against HJ38, the double secret illegal anti-income tax proposition. HJR95 also looks ridiculous to me – the whole Texas Bullion Depository thing is ridiculous, so it comes with the territory, while HJR72 and SJR32 seem reasonable. The rest I’ll figure out later. The ballot wording should be set in August. What do you think about these?

The real goal of SB2

Jun 30th, 2019
by Charles Kuffner.
Comments are off for this post

Let’s take a look at the quotes from the supporters of SB2, the new law that will impose revenue caps on all Texas cities, to see what they say about it.

“They’re going to have to start looking at spending this money like it was their own and not somebody else’s money,” said the bill’s sponsor Sen. Paul Bettencourt, R-Houston. “And they’re going to have to look at priorities.”

[…]

But Ellen Troxclair, senior fellow at the Texas Public Policy Foundation and former Austin City Council Member, said those dire warnings imply a city has no control over its spending.

The reason this bill was one of legislators’ top priorities this year, Troxclair said, is because Texans are frustrated by rising taxes, and if it forces cities to rethink their spending, that’s a positive.

“The bottom line of SB 2 is it brings the rate at which cities are spending money more in line with the people’s ability to pay,” Troxclair said. “I hope that what the cities do is hear the pleas from citizens who elected them to make more responsible decisions when it comes to spending.”

Troxclair added that the bill doesn’t stop cities from going to taxpayers and asking to raise their taxes above 3.5 percent if officials deem it necessary.

[…]

Austin and San Antonio, which both have the highest credit rating of AAA, are also concerned that the caps will have an effect on their ability to borrow. The nation’s three major credit rating agencies have warned that the caps could have a negative impact.

Bettencourt and Troxclair, however, dismissed those concerns, saying that as long as cities are being fiscally responsible, credit rating agencies will have no reason to dock their scores. Bettencourt added that SB 2 doesn’t affect the debt portion of the tax rate, which are set by bond elections.

SB2 was sold as a way of reining in property taxes, to provide savings to homeowners. (Renters are on their own, the Republicans don’t care about them.) But no honest broker actually believes there will be any real savings. Literally no one is going to review their household expenses at the end of a year and say “thank goodness for that revenue cap, it saved us so much money”. Just look at the Houston experience, in which the typical reduction in taxes is less than $100 per year, while the city has been starved of revenue. The whole point of this exercise to to constrain cities’ ability to prioritize its spending needs, because with a revenue cap property tax reduction, no matter how trivial, always comes first. Paul Bettencourt and his cronies want cities to spend less. If that means laying off employees, if it means deferring maintenance and repairs, if it means not offering new services to meet the needs of a changing and growing population, that’s too bad. Or not bad at all, from his perspective, because what does he care about any of that? He wants government at all levels to spend less – more specifically, to spend less on things he doesn’t like – and SB2 will help accomplish that goal. Mission accomplished.

More info on the school finance bill

May 25th, 2019
by Charles Kuffner.
1 comment

Here’s what we know.

Before final negotiations, the House’s version of HB 3 cost $9.4 billion, and the Senate’s cost a whopping $14.8 billion, according to Texas Education Agency calculations. The final cost is around $11.6 billion, according to lawmakers, though an official cost analysis has not been made public.

The House wanted to raise the base funding per student from $5,140 to $6,030, while the Senate wanted to raise it to $5,880. They decided on an even higher number of $6,160.

Both chambers had previously agreed to spend $6.3 billion on public education, including salary increases for teachers, and $2.7 billion for property tax cuts. This final bill appears to include about $6.5 billion for public education, including extra raises and benefits for school employees, and $5.1 billion for tax cuts.

Lawmakers estimated the negotiated version of 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. Legislators also said it would increase the state’s share of public education funding to 45% from 38%. They said it would lower school districts’ cumulative recapture payments, which wealthier districts pay to subsidize poorer districts, by $3.6 billion over two years.

[…]

In the negotiation, lawmakers also decided to drastically change the formulas that determine how local and state funding is allocated to school districts — taking heavily from the Senate’s school finance proposal.

The House had proposed a decrease in school district tax rates by 4 cents per $100 valuation statewide, as well as a mechanism to further decrease higher tax rates. State Sen. Larry Taylor, R-Friendswood, unveiled a version of HB 3 near the end of April — relatively late in the legislative process — that included billions of dollars to lower rates by about 15 cents per $100 valuation, more than either chamber had budgeted.

The negotiated bill lowers tax rates statewide by 7 cents per $100 valuation, with the potential to go lower in future years. That’s a $175 annual cut for the owner of a $250,000 home, not counting other mechanisms in the bill to lower tax rates further.

According to lawmakers, HB 3 includes about $5.1 billion for school district tax cuts — again, more than the initial budget proposal of $2.7 billion. Some of the additional money comes from a new fund established to pay for those cuts. The state comptroller is required to deposit some money from the Available School Fund, which provides funding for schools derived from state-owned land and fuel taxes, and some money from an online sales tax into the new fund.

It is not immediately clear exactly what other sources of money contribute to cuts this biennium or how lawmakers expect to pay for tax cuts in the future. The bill requires the state’s nonpartisan budget board to study potential sources of money for future school district tax cuts and their anticipated impacts on taxpayers, schools and the state.

There’s more, but it doesn’t really answer my initial questions. I hope someone I trust who knows this stuff well comes forward with an analysis, because this is big stuff and it’s going to get passed in the next day or two without a whole lot of public vetting.

Also, too, there are the property tax changes.

In its final form, Senate Bill 2, the reform package, appears to have changed little from when it passed out of the House earlier this month on a 109 to 36 margin.

If signed into law, the measure would require cities, counties and emergency service districts to receive voter approval before raising 3.5% more property tax revenue than the previous year. Community colleges and hospital districts will need to hold an election before surpassing 8% property tax revenue growth.

The constraints only apply to revenue collected on existing property, not new developments.

School districts appear to have been carved out of the bill, but their tax revenue increases are constrained in a high-priority public education bill, House Bill 3. That legislation could lower school tax rates by an average of 8 cents per $100 valuation in 2020 and 13 cents in 2021. For the owner of a $250,000 house, that could yield a tax cut of $200 in 2020 and $325 in 2021.

Currently, taxing units can raise 8% more property tax revenue before their voters can petition to roll back the increase. The 8% figure was set during a period of high-inflation in the 1980s.

The final version of the bill, now titled the Texas Property Tax Reform and Transparency Act, appears to have several provisions intended to add flexibility around the reduced election trigger.

Some of the money taxing units spend providing indigent defense attorneys and indigent healthcare would not be factored into the revenue growth calculation. Taxing units would be able to bank unused revenue growth for three years, allowing them to exceed the 3.5% threshold in some of them. And tax districts can raise $500,000 without having to hold an election, as long as that increase does not exceed 8% revenue growth.

Again, what I really want to know is how this will affect the big cities like Houston, because we’ve had a big target on our backs this session. Thankfully, some of the nastier bills did not survive, but cities’ revenues have already been reduced, for no obvious reason. I just want to know at this point how much worse things will be. And how it will change in the coming years.

Deal apparently reached on school finance

May 24th, 2019
by Charles Kuffner.
2 comments

We await the details.

Texas’ top three political leaders declared Thursday that the Legislature had reached agreements on its three main 2019 priorities: A two-year state budget, a comprehensive reform of school finance and legislation designed to slow the growth of rising property taxes.

Republican Gov. Greg Abbott broke the news on the lawn of the Governor’s Mansion in Austin, just a few days before the Legislature is scheduled to gavel out. Both chambers will need to sign off on the three negotiated bills — House Bill 1, the proposed budget; Senate Bill 2, the property tax bill; and House Bill 3, the school finance bill — before the regular session ends Monday. Language for the compromised legislation, much of which was worked out behind the scenes between lawmakers from the two chambers, had not yet been made public as of Thursday afternoon.

“We would not be here today, making the announcement we are about to make, without the tireless efforts of the members of the Texas House and Senate,” said Abbott, flanked by Republican Lt. Gov. Dan Patrick, House Speaker Dennis Bonnen, R-Angleton, and other House and Senate members who played key roles in negotiating the three pieces of legislation. Almost five months beforehand, as state lawmakers began tackling the issues before them, Abbott, Patrick and Bonnen had pledged from that same spot in front of the Governor’s Mansion to work together and deliver on meaningful school finance and property tax reform.

“Frankly, we’re more together than we’ve ever been,” Bonnen said. “The people of Texas are those who win.”

[…]

According to a flyer detailing some of the components of the compromise reached Wednesday night, the school finance bill will include funding for full-day pre-K and an increase in the base funding per student, which hasn’t changed in four years. It also pumps in $5.5 billion to lower school district taxes up to 13 cents per $100 valuation on average by 2021 — though leaders dodged questions Thursday on exactly how and where the extra money would come from.

The compromise bill, Bonnen said, would reduce recapture payments that wealthier districts pay to shore up poorer districts by $3.6 billion, about 47%. But he also said the state could not afford to completely eliminate recapture, also known as “Robin Hood,” because it would cost too much to completely reimburse school districts from state coffers alone.

The bill will include funding for districts that want to create a merit pay program, giving more to their higher-rated teachers. Though the House decided to nix this from its initial version of the bill, the Senate put it back in and apparently won the fight to keep it in.

On the surface, it sounds pretty decent, though of course the devil is in the details. Where is that $5.5 billion coming from? What does “funding for full-day pre-K” mean? How would recapture change? By necessity, we will have answers soon, as the session ends on Monday, but until then this is more a possibly tantalizing promise than anything else. Stay tuned.

A tale of screwed cities

May 15th, 2019
by Charles Kuffner.
1 comment

That’s my unofficial title for this legislative session.

The interest group representing Texas cities used to be one of the most powerful legislative forces at the Capitol. This session, it has become the GOP’s most prominent adversary.

Its members have been harangued at hearings. Targeted by a proposed ban on “taxpayer-funded lobbying.” And seen multiple proposals sail ahead over its protests.

When, around March, one mayor inquired about the reasoning for a controversial provision in a property tax bill, he said an advisor to Gov. Greg Abbott suggested, “you reap what you sow.”

The message was clear, said McKinney Mayor George Fuller: Local officials had been obstructionists in the past.

Though the antagonistic relationship between Texas cities and the state has been building for years, this session has reached the fever pitch of all out legislative assault, said Austin Mayor Steve Adler, in April. Typically, the Texas Municipal League tracks bills it opposes that are gaining momentum in the Legislature. This session, the group had amassed more than 150.

Among them, was a cable franchise fees bill authored by state Rep. Dade Phelan, a Beaumont Republican and chair of the powerful State Affairs Committee. After the Texas Municipal League warned its members the proposal could cut into cities’ revenue, Phelan had a concise response for the group, which represents 1,156 of Texas’ roughly 1,200 cities.

“When you are in a hole — you should stop digging,” Phelan recommended, in an email obtained by The Texas Tribune.

In an interview, Phelan said he harbored no animus toward the organization, but took umbrage with its opposition to legislation his constituents want. The sentiment is widely-shared in the Legislature, Phelan said, as evidenced by the support the bills on taxpayer-funded lobbying and franchise fees have garnered.

“Those bills have never gotten out of committee before,” he said. The Texas Municipal League represents “their own interests and we are representing the taxpayers.”

“I think there’s a disconnect sometimes,” he added.

The group’s leaders see a different trend. They say model legislation with an anti-city bent has been exported from conservative think tanks and taken root at statehouses across the country. At the same time, Republican strongholds have shifted to the suburbs, making progressive city leaders convenient whipping boys for politicians from the president on down.

There’s more, so go read the rest. It really does boil down to two things. One is the Republicans’ refusal to address our tax system in a meaningful way. There are things we could do to make the property tax system more equitable. There are things we could do with sales taxes to bring in more revenue in a way that wouldn’t be so regressive. Our whole tax system is a byzantine mess, but the only thing that we’re allowed to talk about is cutting property taxes. This session that means putting the screws to cities, even though local property taxes aren’t driving the growth of property tax collections. The Republicans are looking for a political solution, and cities are a convenient target.

Which leads to point two: Cities are liberal and Democratic, so it’s a twofer for state Republicans to stick it to them. And don’t think that having a Republican mayor would change anything:

“I understand the political atmosphere to reduce taxes; there’s no one that would be more aligned with that than I am,” said El Paso Mayor Dee Margo, a former Republican state lawmaker. “But I’m also trying to deal with basics. I say I’m the mayor of public safety, potholes, and parks.”

El Paso’s property values — and so its tax base — is growing at a slower clip than other parts of the state, he said. Though the factors differ from city to city, each municipality has different needs and budgets, and local leaders say they are unaccounted for under a blanket property tax reform policy.

“The frustration is that we are grouped, coupled with across-the-board perceptions,” Margo said.

That’s because your Republican former colleagues don’t care about any of that, Mayor Margo. The only way forward here is to vote them out.

The tax swap is dead

May 8th, 2019
by Charles Kuffner.
1 comment

For this session, at least. Most likely, barring anything strange.

State Rep. Dan Huberty, the top public education leader in the Texas House, postponed two items of legislation Tuesday that would pay for long-term, ongoing school district tax cuts by raising sales taxes — effectively killing any chance of passing the legislation this year.

Huberty tabled until 2021 — the next legislative session — House Joint Resolution 3 and the accompanying House Bill 4621, which would ask voters to increase the state sales tax by one penny to buy down school district property taxes. The Houston Republican’s move came the day after the Senate, headed by a lieutenant governor who had endorsed the proposal, stripped such a provision from its version of the school finance bill in what was perhaps a signal that the measure would be dead in the upper chamber anyway.

Despite Tuesday’s postponement, the idea could still be revived this session; lawmakers could use a different bill as a vehicle to fund school district tax cuts.

Huberty criticized members of the Senate on Tuesday who “have spent their whole careers calling for property tax relief” but did not vote for the school finance measure the day before. And he repeatedly affirmed questions by House colleagues that suggested state Sen. Paul Bettencourt, the Houston Republican who leads the upper chamber’s property tax committee, had failed to take responsibility for coming up with a viable mechanism for property tax cuts when he was part of a school finance commission last year and during the current legislative session.

Bettencourt has arguably been the most vocal GOP senator opposed to the tax swap proposal, a position that has caught some by surprise since he’s closely aligned — both personally and professionally — with Republican Lt. Gov. Dan Patrick, who has made clear he supports the measure. Bettencourt marked himself “present, not voting” on the school finance bill Monday, while the majority of the upper chamber approved the legislation. And on Tuesday morning, ahead of business in both chambers, Bettencourt took to Facebook to once again reiterate his opposition to the tax swap, saying there is “simply no need to raise taxes even higher.”

In response to House members’ criticisms, Bettencourt said he’s long been clear about his concern that the tax swap proposal could amount to a tax increase. When Huberty proposed that the tax swap devote 80% of the new sales tax revenue to property tax cuts and the remainder to public school funding, for example, “I immediately red-flagged that,” Bettencourt said.

“Emotions run high when bills fail,” Bettencourt said. “If you have the votes, pass your bill — don’t blame somebody in the other chamber. That’s just kind of a rule that I’ve learned.”

[…]

On Tuesday morning, before the House gaveled in for the day, Bonnen told House Republicans during a caucus meeting that there would be no point in bringing up the proposal for a vote in the lower chamber if it was considered dead in the Senate, according to multiple people who were at the gathering. Caucus members at the meeting, according to those sources, largely agreed with Bonnen, who said the Senate stripping such a provision from its version of the school finance bill Monday suggested the upper chamber couldn’t muster enough support to approve a tax swap proposal.

After Huberty postponed the tax swap legislation, a Bonnen spokesperson said in a statement that the proposal had been “an opportunity for lawmakers to further reduce property taxes” and sustain tax relief found in the lower chamber’s school finance bill.

“Speaker Bonnen believes it is in the House’s best interest to devote the limited time left in session to our Day One priorities — passing legislation to provide meaningful school finance and property tax reform for all Texans,” the statement read.

See here for some background. To an extent, I agree with Bettencourt, in that a sales tax increase is a terrible idea. Of course, Bettencourt sees no need to pay for tax cuts. He just wants to cut them, and nothing else really matters as far as he’s concerned. The tax swap is a terrible idea that deserved to die, but at least Huberty was trying to pay for what he wanted to do. What happens next, with school finance and everything else, we’ll see.

Where goes the tax swap plan from here?

May 7th, 2019
by Charles Kuffner.
2 comments

We start with the double down.

Showing their usual united front, the state’s “Big Three” political leaders on Friday tried to remake their case for why the Texas Legislature should deliver on long-term, ongoing property tax relief before the session wraps up this month.

They also expressed confidence that they would get the work done — even as House Democrats said they appeared to have the votes to block the lower chamber’s current main vehicle to provide the biggest property tax cut.

“Our goal is really simple: We’re going beyond the point of hoping to reform property taxes to the point where we’re hoping to to deliver true property tax relief through property tax reductions,” Gov. Greg Abbott said at a Capitol press conference Friday afternoon, flanked by Lt. Gov. Dan Patrick and House Speaker Dennis Bonnen, the Republican leaders of the Senate and House, respectively.

The three reaffirmed their commitment to a proposal that would increase the state sales tax one percentage point, raising about $5 billion per year to lower school district tax rates — which many have seen as a long shot from the start, with lawmakers from both parties skeptical about a sales tax hike.

The proposal has been moving through the Capitol so far in the form of a joint resolution, which needs two-thirds of each chamber to pass — at least 100 votes to pass the House and 21 votes to pass the Senate. If it passed both chambers, the proposal would then land on the November ballot for voters to decide, which leaders in support of the resolution have framed as a more democratic process.

House Joint Resolution 3 — which would ask voters to approve the sales tax swap for property tax relief — and its enabling legislation, House Bill 4621, passed out of the House Ways and Means Committee on Wednesday. The tax swap is expected to head to the lower chamber for a debate Tuesday.

The original version of the bill would have used 20% of the increased sales tax revenue to fund schools and 80% for property tax relief. That changed earlier this week, when state Rep. Dan Huberty, a Houston Republican who authored the legislation, tweaked the proposal to instead funnel all new sales tax dollars into property tax relief.

The move seemed to be an effort to bring on some of the Legislature’s more conservative members who had signaled they could be on board with a proposal if the new revenue was entirely dedicated to property tax relief. But it also seemed to solidify Democrats’ opposition to it, especially since the sales tax is regressive, meaning it takes a higher percentage of income from poorer people than richer people. A sales tax swap would raise taxes overall for Texas households earning less than $100,000 and would bring tax relief for households above $100,000.

State Rep. Chris Turner, who chairs his House Democratic Caucus, told The Texas Tribune that there are more than 60 “hard no” votes from Democrats against the proposal. If that opposition sticks for Tuesday’s expected vote on House Joint Resolution 3, its chances of passing the lower chamber would seem unlikely.

Patrick said he hoped both chambers would be able to get the needed two-thirds approval for the joint resolution from each chamber, but indicated he was open to getting it passed in different ways, exclaiming, “If it doesn’t, we’ll make it happen anyway!”

Sure, Dan. If you want to know why some of us are so skeptical of this, while plutocrats like Dan Patrick love it, consider this.

The state-run Legislative Budget Board estimated that the top 40% of wealthiest Texas households would see enough property tax savings to offset their increased sales tax payments in fiscal 2021. The bottom 60% of Texas households would pay more in taxes overall.

Households that make less than $99,619 would pay a total of $171 million more in taxes under the tax swap. Households that make more than that would pay a total of $424 million less in taxes, according to the analysis.

The disparity is because poor Texans tend to spend a greater portion of their money on taxable items.

The bottom fifth of Texas household incomes — those with incomes less than $37,630 — spend about 7.3% of their income on state sales tax while households in the top fifth of incomes — those with incomes of $149,453 and more — spend 1.6% of their income on state sales tax, according to the Texas Comptroller of Public Accounts.

Of course, we’ve known this forever, but the same bad idea crops up every few years and gets beaten down by the club of the same evidence. So we go through the motions. You can catch up on reading about this at various locations – the DMN, the Chron, Better Texas Blog with a handy chart – but be sure to read the analyses of the politics of this by Ross Ramsey and Scott Braddock. The reason the Big Three are putting on such a show of bravado is because they’re holding an eight-high hand in a game of five card stud, and they know it. And as Braddock notes on Twitter, so do members of the Lege.

Which may be why in the end, we got this.

The Texas Senate on Monday approved a bill to massively overhaul public school finance, but did so while backing away from a proposal to use an increased sales tax to lower school district property taxes.

After an hours-long debate on dozens of proposed changes, the Senate voted 26-2 on House Bill 3, which under the version passed by the upper chamber would increase student funding, give teachers and librarians a $5,000 pay raise, fund full-day pre-K for low-income students, and lower tax bills.

The House and Senate will have to negotiate their significant differences over the bill — including how to offer teacher pay raises and property tax relief — in a conference committee before it can be signed into law.

“When you’re doing something as complex as this, there’s going to be something you don’t like,” said state Sen. Larry Taylor, R-Friendswood, the bill’s author, anticipating tension throughout the day’s debate.

[…]

Taylor stripped the [sales tax] increase from HB 3 and offloaded some of the more expensive property tax relief provisions in the bill. The bill no longer includes an expansion in the homestead exemption from school district taxes. It lowers property tax rates by 10 cents per $100 valuation, instead of 15 cents, saving the owner of a $250,000 home $250 instead of $375.

The legislation would still limit the growth in school districts’ revenue due to rising property values, a proposal pitched before session began by the governor. School districts that see their property values significantly increase would have their tax rates automatically reduced to keep tax revenue growth in line. That would now start next year, instead of in 2023.

“The bill before us today has no linkage to the sales tax and is not contingent upon a sales tax,” Taylor said.

Instead, the bill creates a separate “Tax Reduction and Excellence in Education Fund” to fund school district tax relief. State Sen. Kirk Watson, D-Austin, said a working group came up with a plan to get $3 billion from several sources, including the severance tax on oil and gas extraction and an online sales tax.

“This does not increase any taxes of any kind,” he said.

So does this mean that the tax swap is dead? Well…

In for a penny, in for a million pounds, I guess. Have fun taking that vote, Republicans.

Once again with how the property tax system is rigged

May 6th, 2019
by Charles Kuffner.
4 comments

Your taxes are higher than they need to be so that large commercial properties can have lower taxes.

As property owners across Texas receive their notices this month of their tax values, appraisers are bracing for another round of appeals by hotels, office buildings and oil refineries making use of a 22-year-old law that has been wildly successful at knocking down their taxable values.

Over the years, appraisers say the law has increasingly shifted the state’s property tax burden onto homeowners, who now face the third-highest property tax rate in the nation.

“The only public policy reason behind it is to enrich commercial land owners at the expense of residential ratepayers,” said Jeff Branick, county judge in Jefferson County, where an appeal filed by owners of a huge industrial facility is creating a multimillion dollar hit on local government tax revenue. “If I had all properties being appraised at true fair market value, I could lower the tax rate.”

Protests and lawsuits related to the tax provision knocked a total of $44 billion off the tax rolls last year in the state’s five biggest counties: Harris, Bexar, Dallas, Tarrant and Travis, records from the Texas Comptroller’s Office show — an amount that equates to nearly $1 billion in tax revenue for local school districts and governments, according to a Hearst Newspapers analysis.

[…]

Jim Popp, a prominent Austin tax attorney who drafted the 1997 law, says the tax provision is working. The change, he said, ensures taxpayers have a way to protest when their property is assigned a value that’s higher than similar ones.

“To me, fair means treating similar taxpayers similarly,” said Popp, with Popp Hutcheson PLLC. If some properties are reduced below their market value, the next year appraisal districts “can come back and correct it so everyone is treated fairly,” he said.

Any property owner can file an equity appeal, but big businesses with the financial means to file lawsuits year after year make the most use of the law.

Property owners in Harris County filed over 5,000 lawsuits in 2017 making an equity argument. Roughly 90 percent came from commercial owners and together wiped more than $5.8 billion from the tax rolls, data from the Harris County Appraisal District shows.

Equity appeals let owners reduce their property’s taxable value by simply showing it’s higher than the median of similar properties — without any regard for what the property would sell for in the open market, a traditional measure of value.

But with so few guidelines in the law, appraisers say owners can find a median by pointing to lesser properties that are not really similar, or that aren’t even located in the same county.

While properties must be “appropriately adjusted” to account for any differences, appraisers say it can be impossible for unique buildings.

“It’s like comparing a 15,000 square-foot residential mansion to a two bed, two bath, two car garage,” said Jeff Law, chief appraiser for the Tarrant Appraisal District. “How do you make adjustments for that? You don’t, because they aren’t comparable.”

Once one property’s taxable value is reduced, the median drops, too. As a result, property owners often try to be the last to protest, said Brent South, Chief Appraiser at Hunt County Appraisal District and a past president of the Texas Association of Appraisal Districts.

“Each time one of their competitors gets an adjustment, it drives that median down,” South said. “It’s a continual spiral effect.”

We’ve covered this before. Fixing this basic problem – which again was a cornerstone of Mike Collier’s campaign for Lt. Governor – should be the first order of business for a Lege that wants to at least slow the rate of property tax growth for homeowners. Doing so would impose a cost on big businesses, though, and the Republicans can’t accept that. So here we are, wasting time again with regressive and unpassable property-tax-for-sales-tax swaps. You can’t fix what’s broken if you’re not honest about what is broken and why it’s broken. As they have done time and time again, the Republicans are demonstrating that this session.

More action on the school finance/property tax front

May 2nd, 2019
by Charles Kuffner.
Comments are off for this post

From Tuesday:

Rep. Dan Huberty

The Texas House gave preliminary approval to a priority property tax reform package Tuesday, teeing it up for negotiations with the Senate and impelling the upper chamber to act on an omnibus school finance measure.

Together, the education and tax overhaul bills have been the top policy issues of the 2019 legislative session, and they are ultimately expected to be ironed out behind the scenes — and perhaps simultaneously.

Tuesday’s vote marks a small milestone for House leadership, which has muscled its must-pass budget, public education and tax reform bills to passage, all before the last month of session begins. But the House and Senate will next need to reconcile notable differences among the three measures, and the upper chamber has yet to move the school finance bill out of committee.

“We have done our job in the House — and we have sent everything over to the Senate,” said state Rep. Dan Huberty, R-Houston, author of the school finance bill.

Senate Bill 2 was approved on a 107-40 margin after a half-dozen hours of debate. More than 20 Democratic lawmakers broke party ranks to support the measure, which has garnered adamant opposition from city and county officials since its introduction.

See here for the previous update. The House version of SB2 makes it contingent on the House version of school finance reform passing, namely HB3. The Senate started that process yesterday.

The Senate Education Committee held a hastily arranged hearing Wednesday morning to vote out comprehensive school finance reform legislation — accelerating the bill’s journey to the Senate floor and eventual negotiations with the lower chamber.

The fast-tracked revision and vote on House Bill 3 came the day after House lawmakers voted through a property tax reform bill, making it contingent on school finance reform passing this session. State Sen. Larry Taylor, the Senate Education Committee’s chair, had originally told The Texas Tribune on Tuesday he did not anticipate a committee vote on school finance until Thursday or next week.

The full Senate is now expected to vote Friday on the legislation, which aims to increase the base funding for each Texas student, increase teacher pay, provide money for full-day preK for low-income students, and allow for long-term property tax relief.

Many details of the bill still need to be ironed out, however, and committee members voted Wednesday without an official analysis of how their districts would fare financially. Still, the vote seemed to address concerns that the Senate was moving too slowly on school finance.

[…]

Senate Education Committee members voted out a version of the school finance legislation that differs in many ways from the version the House voted out in early April. It includes a $5,000 across-the-board raise for full-time classroom teachers and librarians, funding for districts that want to pay higher-rated teachers more, money for districts with better student academic outcomes, and a few different long-term property tax relief proposals.

The House’s version of the bill requires districts to use a portion of their additional base funding per student on raises for all school employees and designates extra money for raises to be given at districts’ discretion. It lowers school tax rates by 4 cents per $100 valuation — $100 off a tax bill for the owner of a $250,000 home — and lowers rates further for districts taxing higher. But it doesn’t include a proposal for long-term, ongoing tax relief.

As we know, the Republican plan to pay for property tax “relief” is raising the sales tax. That would require a constitutional amendment, and for the House version of the joint resolution to be voted out of committee by next Tuesday at 11:59 PM. As you know, I think that’s a terrible idea and am rooting for it to fail. The clock is ticking, but at least by next Tuesday we’ll know what parameters the conference committees will have to work with.

One more thing, from the first story:

Few attempts to make major changes to the bill were successful Tuesday.

One amendment, from state Rep. Charlie Geren, R-Fort Worth, seems to bar anyone but licensed attorneys from representing taxpayers in the property tax appeal process on a contingency fee basis. The change would likely affect the author of SB 2, state Sen. Paul Bettencourt, a Houston Republican and a property tax consultant.

“It affects a lot of people. We’ll talk about it in conference,” Geren said. He added, “I don’t believe in contingency fees, but if we have to have contingency fees to do this, then I want the lawyers to do that.”

Heh. Someone please give Charlie Geren a fist bump for me. The Chron has more.

School finance and property tax update

Apr 30th, 2019
by Charles Kuffner.
1 comment

From last week.

Rep. Dustin Burrows

Blasting the Senate for taking a symbolic approach on school district taxes, a panel of House lawmakers heavily altered then approved the upper chamber’s version of priority property tax legislation late Thursday. And committee members pointedly included a provision meant to rebut claims that they were not committed to wholesale reform.

The chair of the tax-writing Ways and Means committee, state Rep. Dustin Burrows, said the House had kept a provision in Senate Bill 2 that attempts to constrain school district property taxes. While he and finance experts have said the language needs to be addressed in the Education Code, there “is an intent in the Senate to symbolically express that they are committed to lowering school property taxes,” Burrows said.

“Well, because of that, I want to make sure that the House also expresses its full commitment to lowering people’s property tax bills related to schools,” the Lubbock Republican said.

The Senate had tried to limit schools’ tax rate increases to 2.5%, without an election.

“We actually used a 2.0 number,” Burrows said, “to show that the House is equally as committed to doing significant things this session for the property taxpayers of the state of Texas.”

The insertion of the 2.0 figure may be a dig at hardline conservatives and Senate lawmakers, who have suggested the House gutted its own property tax reform package when they removed school district language from it in March. The lower chamber’s approach, however, has earned the backing of experts who say a separate public education bill is the most feasible way to make changes to the school finance system.

“To do property tax reform for schools, you really have to do it in the Education Code. I think that all of the experts agree,” Burrows said. “This bill has never touched the Education Code. It can’t touch the Education Code, that is House Bill 3,” he said, referencing the lower chamber’s omnibus school finance package.

As adopted in a 8-3 vote Thursday, SB 2 now closely resembles House Bill 2, a companion measure passed by the House committee last month — even taking on the same name: The Texas Taxpayer Transparency Act. The Democratic vice chair of the committee, state Rep. Ryan Guillen, joined Republicans in support of SB 2’s passage Thursday.

In the latest version of the bill:

  • Cities, counties and emergency service districts must hold an election if they wish to raise 3.5% more property tax revenue than the previous year
  • Those entities can increase their property tax levies by $500,000 a year, without triggering an election
  • Other taxing units — namely, hospital districts and community colleges — remain at an 8% election trigger, with Burrows’ citing the inflation of medical and education expenses
  • Homestead exemptions offered by local municipalities can be factored into the revenue growth calculation, preventing cities and counties from being penalized if they offer their residents tax reductions
  • A five-year carry-over provision lets taxing units bank unused revenue growth

[…]

A final change Thursday makes passage of SB 2 contingent on HB 3’s approval.

“These two are tied together,” Burrows said.

See here for more about HB3, and here for more on SB2. Ross Ramsey gets into the politics of the moment, which includes the Republican leadership’s continuing fealty to the property tax for sales tax swap that isn’t going anywhere. It’s hard to compare, because each session is its own story, but it sure feels to me like not a whole lot has happened so far, with less than five weeks to go. The big ticket items dragging along and seeming to go nowhere isn’t unusual, but what else has even made it to the floor of the other chamber? Not that I’m complaining, mind you, I’m just curious. Word is that SB2 will be up in the House today, so we’ll see how it goes. There’s still a wide range of possible outcomes.

No-nuke version of SB2 passes the Senate

Apr 16th, 2019
by Charles Kuffner.
1 comment

Dan Patrick gets his bill, without having to do any nasty partisan maneuvering.

The Texas Senate broke a logjam Monday that had paralyzed a piece of priority legislation for weeks — blunting a controversial provision in its property tax reform package and then advancing the bill, without having to deploy a procedural “nuclear option” to move it.

A vote on Senate Bill 2, a top imperative for state leaders, had been expected last week. But an apparent lack of support stalled the vote in the upper chamber, where the backing of 19 senators is generally required to bring a bill up for debate. After Republican Lt. Gov. Dan Patrick threatened to blow past decades of tradition and bring the measure to a vote with a simple majority, state Sen. Kel Seliger, a vocal dissenter, relented Monday, allowing the bill onto the floor. He did not support its passage.

Seliger’s announcement came alongside a reworked bill with a handful of technical changes and one notable concession. As updated, SB 2 will force cities, counties and other taxing entities to receive voter approval before raising 3.5% more property tax revenue than the previous year — a change from the 2.5% trigger originally proposed. School districts would still face the 2.5% threshold under the version of the bill approved Monday.

Revenue generated on new construction does not count toward the threshold. And small taxing units, with sales and property tax levies under $15 million annually, will need to opt into some of SB 2’s provisions in an election.

[…]

After three hours of debate, SB 2 passed on an 18-13 vote, with Seliger joining the upper chamber’s Democrats in opposition. It was then given final approval on an 18-12 vote — with Sen. Eddie Lucio, Jr., D-Brownsville, voting present — and will be sent to the House for further debate.

The lower chamber, meanwhile, has postponed discussion of its property tax reform legislation until April 24. Unlike the Senate’s version, the House has exempted hospital districts, community colleges, emergency service districts and school districts from abiding by a 2.5% election trigger — a move that has enflamed far-right lawmakers and activists, who say homeowners will feel scant relief if those entities are exempted.

See here for the background. One way or another, this was going to pass. Sen. Seliger made a point about comity and tradition, for whatever those things are worth to Dan Patrick, and he voted according to his conscience, which is a good thing as long as one has a good conscience. Which Sen. Seliger has, and I appreciate his effort. Now it’s just a matter of what the conference committee bill looks like, since the House version will be different. Figure this one will more or less go down to the wire, but it will pass in some form similar to this. It’s a lousy bill and lousy policy, but (say it with me one more time), nothing will change until we change who we elect. Texas Monthly has more.

Desperate Dan

Apr 14th, 2019
by Charles Kuffner.
9 comments

Dan’s gonna do what Dan’s gonna do.

Lieutenant Governor Dan Patrick, increasingly desperate to pass legislation aimed at reforming the state’s property tax system, told a group of senators late Thursday night that if he can’t get the votes to win passage of the bill, on Monday he is simply going to change a decades-long Senate practice in order to guarantee himself a victory. Patrick issued the warning to Senate Democrats Thursday night, according to multiple sources familiar with the discussion.

To take up debate on legislation, three-fifths of the Senate, or nineteen senators, must vote to move forward. Patrick warned he would suspend this so-called three-fifths rule, a move known around the Capitol as the “nuclear option” because it would upend decades of tradition in the upper chamber, a body that has long esteemed itself for decorum and consensus-building. Patrick’s apparent decision, supported by Republican leadership, to suspend the tradition on Senate Bill 2 would mean that only a simple majority—sixteen votes—would be necessary to pass the property tax bill.

The move has Democratic senators scrambling to fashion a response and has some Republicans concerned about the precedent that the move could set. Senators said they intend to work throughout the weekend to fashion a bill acceptable to both parties and thereby avoid the nuclear option.

“It underscores the seriousness of the situation,” said Bill Miller, a longtime lobbyist and Capitol watcher who could not think of another instance in which this legislative maneuver has been used.

The Trib goes into some more detail.

Traditionally, the upper chamber starts the session by passing what’s called a “blocker bill” — a bill that sits ahead of any other priorities on the Senate’s ordered agenda so that bringing up anything other measure ahead of it requires a three-fifths vote, or 19 senators in support if all 31 are on the floor. Passing that bill would allow Patrick to bring a measure to the floor with a simple majority of senators, just 16.

The “blocker bill” tradition dates back at least to the 1950s.

It wouldn’t be the first time Patrick upended tradition to grease the skids in the chamber he’s led since 2015. That year, in his first term as lieutenant governor, Patrick lowered the threshold from two-thirds to three-fifths, allowing the chamber’s Republicans to bring legislation to the floor without support from any Democrats.

Senate Bill 2, along with an identical House Bill 2, was filed in January after the governor, lieutenant governor and speaker of the House declared a united front in addressing property tax reform this session. But since then, facing opposition from local officials who argue the 2.5 percent election trigger is too low to accommodate their budgeting needs, it stalled in the Senate, passing the upper chamber’s property tax committee in February but not coming to the floor for a vote.

Meanwhile, in the House, the once-identical bill was overhauled in committee to carve out school districts, a change that has drawn criticism from some of the lower chamber’s more conservative members.

The House, which seems to have been moving the measure at a faster clip, was scheduled to debate the property tax bill on Thursday, but recessed that morning amid rumors that the Senate would instead bring up its version first. After a day of private negotiations, neither chamber brought up the proposal.

You may note the interesting math involved in Dan’s dilemma.

Senate rules say a bill can only be debated on the floor if three-fifths of senators, or 19 of the 31 members, agree to hear it. Republicans hold exactly the number of seats needed to meet this threshold.

But at least one, Amarillo Sen. Kel Seliger, has expressed his opposition to the tax bill, citing a preference for local control and concern that the 2.5 percent cap would hurt local government services. Without this support, Patrick cannot bring it up for debate unless he suspends the rules and instead allows a simple majority of senators to bring the bill up for debate.

In an interview with The News on Friday, Seliger criticized Patrick’s plan.

“The nuclear option would be a mistake,” Seliger said. “It’s obviously the desperate option.”

Seliger said he was still opposed to Senate Bill 2. Even if rural areas were exempted and public safety costs carved out, he still has serious problems with the proposal. When asked what tax proposal he would back, Seliger mentioned legislation he’s filed that “is not just designed, I think, to handicap those units of local government.”

Senate Republicans reached no agreements or compromises Thursday, Seliger said, adding Patrick was not interested in straying far from his legislation by “discussing any substantive changes or amendments to SB2.”

Seliger also criticized Patrick for saying he was frustrated one Republican could hold up the process.

“They’re inappropriate,” Seliger said of the comments. “Negotiations and things like that, when they’re held in the media, I don’t think are very productive. Our system is designed so people can work together in a non-partisan fashion, and I’m not sure what those comments do for collegiality and cooperation and the Senate.

Hey, remember how Dan Patrick and Kel Seliger have been feuding? I’m pretty sure they both remember it.

I’m not going to offer a principled defense of the three-fifths rule, or its deceased predecessor the two-thirds rule, which had largely become an irritant to be pushed aside rather than an actual rule before it was finally modified to better accommodate the number of Republicans in the Senate. It’s anti-majoritarian, and as Democrats and progressives are arguing against the morass of anti-majoritarian policies and laws in our federal government as fundamentally anti-democratic, I’m not going to carve out a special-pleading exception at the state level. There are plenty of other anti-majoritarian objects in our state government right now, most notably gerrymandering and voter suppression, that deserve our uncompromised opposition. This is not to say that I won’t derive some Nelson Muntz level of schadenfreude at Dan Patrick having to act like a bully who’s been exposed as a weakling, because we all deserve every opportunity we get to deride Dan Patrick. But when the day comes that Democrats achieve a majority in the State Senate, I’ll raise a glass in Patrick’s direction when Dems use that majority to pass the bills they want to pass, without getting tripped up by old traditions.

Yes, they really are now pushing a sales tax for property tax swap

Apr 11th, 2019
by Charles Kuffner.
22 comments

Some bad ideas never die.

Texas’ top three political leaders — Gov. Greg Abbott, Lt. Gov. Dan Patrick and House Speaker Dennis Bonnen — threw their support Wednesday behind a proposal to increase the sales tax by one percentage point in order to lower property taxes across the state.

But that’s only if lawmakers agree to limit future local property tax increases.

The proposal would raise the state’s sales tax from 6.25% to 7.25%, generating billions of additional dollars annually for property tax relief, if voters approve a constitutional amendment. But the idea will be a hard sell to Democrats, since the sales tax is considered regressive, meaning lower-income Texans end up paying a larger percentage of their paychecks than higher-income Texans.

“Today we are introducing a sales tax proposal to buy down property tax rates for all Texas homeowners and businesses, once Senate Bill 2 or House Bill 2 is agreed to and passed by both Chambers. If the one-cent increase in the sales tax passes, it will result in billions of dollars in revenue to help drive down property taxes in the short and long term,” said a joint statement from the three Republicans.

Neither chamber has passed HB 2 or SB 2, which would require voter approval of property tax increases over 2.5%.

The House Ways and Means Committee was scheduled to take public testimony on the House’s sales tax swap proposal this week but delayed hearing the bills. Rep. Dan Huberty, R-Houston, who authored House Joint Resolution 3 and House Bill 4621, is considering changing the legislation to use a fraction of the additional money generated by the sales tax for public schools — in order to get more Democrats on board.

The bills are intended to provide another revenue source to help significantly cut down local school property taxes, which make up more than half of the local property taxes levied in Texas.

If the Legislature approves the resolution, the constitutional amendment would go to voters to approve in November, and if voters sign on the tax rate change would apply in January 2020.

See here for the background and my opinion about this lousy idea. Given that a constitutional amendment is needed for this, it will be easy enough to prevent it from happening. The progressive case against swapping out property taxes, which will disproportionately benefit commercial real estate and wealthy homeowners, for regressive sales taxes, is clear cut, and likely to hold a lot of sway with the current Democratic caucus. There’s also polling evidence to suggest that the public doesn’t care for a sales tax increase. I’m a little skeptical of that, since the question was not asked in conjunction with a potential cut in property taxes, but that’s an argument for the Republicans to make, and given the baked in doubt about anything actually reducing property taxes (for good reason!), I’d take that bet. HB2 is up for debate today, so we’ll see how this goes. The Chron and Texas Monthly have more.

House approves budget, and other news

Mar 31st, 2019
by Charles Kuffner.
Comments are off for this post

Always a major milestone.

In Dennis Bonnen’s first major test as speaker of the Texas House, the chamber he oversees resoundingly passed a $251 billion budget Wednesday after a long but largely civil debate — a departure from the dramatics that have typically defined such an affair.

Though lawmakers proposed more than 300 amendments to the spending plan, Bonnen, an Angleton Republican, and his chief budget writer, state Rep. John Zerwas, R-Richmond, finished the night with their budget plan largely intact. After 11 hours of relatively cordial discussion, lawmakers agreed to withdraw the vast majority of their amendments or move them to a wish list portion of the budget, where they are highly unlikely to become law.

The budget passed unanimously on the final vote. The legislation, House Bill 1, now heads to the Senate, whose Finance Committee was set to discuss its budget plan Thursday.

“I’m proud of where we are in the bill that we are sending to the Senate,” Zerwas said at the end of the marathon debate. “Each and every one of you should be incredibly proud of the work that you’ve put in here.”

The two-year spending plan’s highlight — a $9 billion boost in state funding for the public education portion of the budget — remained unchanged. Of that, $6 billion would go to school districts, and the remaining $3 billion would pay for property tax relief, contingent on lawmakers passing a school finance reform package.

The budget plan would spend $2 billion from the state’s savings account, commonly known as the rainy day fund, which holds more than $11 billion.

“I’m not here to compare it to previous sessions,” Bonnen told reporters after the House budget vote. “But I’m here to tell you we had a great tone and tenor tonight, and I’m very proud of the business that we did.”

[…]

So while Bonnen’s first budget night as speaker was hardly free of controversy — an argument over the effectiveness of the state’s “Alternatives to Abortion” program, for example, derailed movement on amendments for nearly an hour — the occasional spats paled in comparison with those of years past. There were no discussions at the back microphone of lawmakers’ sexual histories, as happened in 2015, and no one had to physically restrain House members to prevent a fistfight over the fate of a feral hog abatement program, as happened in 2017.

Still, state Rep. Jonathan Stickland, R-Bedford, continued his long-running campaign against the feral hog program. And though the exchange ranked among the evening’s rowdiest, it was more than tame by last session’s standards.

State Rep. Drew Springer, R-Muenster, again opposed Stickland’s amendment to defund the program, which reimburses local initiatives to eradicate wild hogs. Stickland responded, “Members, although I respect the thoughtful words of Rep. Springer … let’s end this program right here, right now.”

Stickland’s amendment failed, with just four votes in favor.

See here for more on last session’s House budget debate. One should never miss an opportunity to illustrate Jonathan Stickland’s failures. The House also approved a supplementary budget for the previous biennium, to cover expenditures that were not previously appropriated, such as the traditional underestimating of Medicaid’s costs and all of the Harvey recovery funding.

Speaking of revenues:

House Republicans muscled a heavily altered version of their property tax reform bill through a committee early Thursday, notching a single Democratic vote and swiftly shooting down attempts to further modify the draft.

A top priority for state leaders, House Bill 2 would require cities, counties and other taxing units to receive voter approval before levying 2.5 percent more property tax revenue than the previous year. A vote was expected to come Wednesday morning on a new draft of the legislation, which contains changes likely to appease small and special taxing units but leave big municipal leaders staunchly opposed.

But the hearing on the new version was postponed until past midnight. The 16-hour delay gave an unusual cluster of critics time to trumpet their concerns with the measure — and then for top House leaders to respond in an informal late-night news conference.

“Sometimes when everyone’s a little bit upset with you, maybe you have a good balance — that’s probably a good sign,” said House Ways and Means Committee Chair Dustin Burrows, the author of the legislation and a Lubbock Republican. “We worked really hard; we talked to a lot of different constituencies” and a lot of members. “I think you’ll see in the committee substitute, the work product and a lot of collaboration.”

As amended, HB 2 now exempts community colleges, emergency service districts and hospital districts from abiding by the 2.5 percent election trigger. Another provision lets certain districts, including cities and counties, bank unused revenue growth, so long as they average below 2.5 percent over five years. And new “revenue enrichment” language could cushion some taxing units by letting them raise $250,000 in new property taxes a year, even if it exceeded the growth rate. The threshold, set at $250,000 for 2020, would be adjusted by the state comptroller annually, based on inflation.

[…]

Currently, voters can petition for an election if property tax revenue growth exceeds 8 percent, a rate set during a period of high inflation in the 1980s. State leaders have touted the lower chamber’s proposal and a Senate companion as an overdue correction and as a needed check on spiraling property tax bills. But critics say the reform efforts would not reduce tax bills, just slow the rate at which they grow — and, in the process, hamper local officials’ ability to provide public services for growing populations.

As you know, I oppose revenue caps, no matter how well intentioned. The reason the Lege ties itself into knots every two years in a vain attempt to limit property tax growth is that a taxing system that so heavily relies on property taxes fundamentally relies on a system that is divorced from people’s ability to afford their taxes. As I muse every two years, if only there were some system of taxation that was proportional to how much money people made in a given year, that would solve so many of these problems. Too bad no such system exists anywhere in the world.

Of course, another way to limit property tax growth for homeowners would be to ensure that everyone is paying their fair share of property taxes.

As state leaders promote their property tax reform package as needed relief for everyday Texans, some Democrats and county appraisers suggest a provision in the tax code has stacked the system in favor of corporations that can appeal their valuations with a combativeness most homeowners can’t muster.

At issue: a 1997 amendment, drafted by a prominent tax attorney, that critics say has allowed business and industry to lower their property tax burden at the expense of other taxpayers. The provision offers all Texans a way to fight their appraisals by arguing they were treated unfairly compared to other properties. But critics say large property owners have capitalized on it to drive down their costs, while residences and small businesses can’t afford to do the same.

“If you have a whole category of property that is nonresidential systematically paying less, well who do you think is paying more?” said Bexar County chief appraiser Michael Amezquita.

Amezquita is one of several officials who say their districts have been inundated by appeals and lawsuits from commercial owners trying to lower their appraisals, which determine what taxes are owed on a property. Supporters of the “equity” provision say it’s a critical tool for all property owners, and that commercial properties aren’t afforded the tax exemptions many home and agricultural land owners receive. Critics counter only well-funded property owners can afford to sue — and when they do, there’s often little an appraisal district can do to fight back.

“The deck is stacked against us,” said Amezquita, who has been sued by a J.W. Marriott resort seeking to have its taxable value reduced. A spokeswoman for the hotel declined comment.

I’ve written about this before. This issue of equity appeals was a cornerstone of Mike Collier’s campaign for Lt. Governor. We’d be having a much broader conversation about fairness and equity in taxation if he had won that race, but he didn’t and so we aren’t. Better luck next time, I guess.

Anyway. The Senate still has to approve its budget, and school finance reform remains a work in progress. There’s a decent amount of harmony now, but plenty of opportunities for tension, drama, and good old fashioned nastiness remain. Which is as it should be.

How would you implement Prop B?

Mar 25th, 2019
by Charles Kuffner.
5 comments

Here, from last week, is Mayor Turner’s official announcement about layoffs, following a failure to come to an agreement with the firefighters’ union about a time frame to fully implement Prop B. Here’s the Chron story about the firefighters protesting the layoffs, which we knew were coming – indeed, we’d known since last year, as that was one of the main points Mayor Turner made during the Prop B campaign. The Chron editorial board agrees with Turner that given the limited options available, layoffs are the only reasonable choice.

Now, to be sure, there is the garbage fee proposal, which Council will vote on this week. It would, at least in theory, pay for the increased costs that Prop B imposes, though there are objections. I’ve laid some of them out – a trash fee should be used for solid waste collection, the potential for litigation is non-trivial – and I’ll add another one here: If a garbage fee is the mechanism for funding Prop B, that necessarily means that only some Houstonians are contributing to that. Anyone who doesn’t live in a house that has city of Houston solid waste service would not be subject to this fee. (At least, I assume so – it’s not clear to me how this fee will be assessed.) Maybe you think that’s a big deal and maybe you don’t, but I guarantee someone will complain about it.

So the question remains, how would you implement Prop B? We all agree Prop B will cost some money to implement. The firefighters have never put a dollar figure on it themselves – they have made claims that the fire department brings in revenues that could be spent on the fire department instead of other things, which doesn’t actually solve anything but just recapitulates the argument that the city should spend more on firefighters. Raising the property tax rate is out, as it would violate the stupid revenue cap. Indeed, as we know, the city has had to cut the tax rate multiple times in recent years, costing itself a lot of revenue in the process. The basic options are a flawed fee that will charge some households up to $300 a year and others nothing, and layoffs. And if you’re going to do layoffs, the ones that make the most sense are the firefighters themselves, as the vast majority of calls to HFD are for emergency medical services and not fires – EMTs are cheaper to hire, don’t require expensive fire trucks to get to where they’re going, and aren’t in scope of Prop B. And that, barring any late-breaking agreement to implement Prop B more slowly, is what we are going to get.

So then, what if anything would you do differently? I’m open to suggestion.

UPDATE: Here’s City Controller Chris Brown saying the cost of Prop B is unsustainable outside an agreement to phase it in over five years, which is what the city has been pushing for.

House moves its school finance bill

Mar 21st, 2019
by Charles Kuffner.
Comments are off for this post

Step two of the process.

Rep. Dan Huberty

The Texas House Public Education Committee unanimously signed off on a comprehensive $9 billion school finance and property tax reform bill Tuesday — but only after removing a controversial educator merit pay provision that had angered teachers unions.

House Bill 3, filed by committee chair Rep. Dan Huberty, R-Houston, would put $6.3 billion into public schools and $2.7 billion into property tax reform. The bill will likely head to the full House soon, where more than 100 have already signed on as co-sponsors.

“Everybody’s opinion is welcome,” said Rep. Ken King, R-Canadian, before voting to approve the bill. “I would just hate to see the destruction of a valiant effort because somebody didn’t like one little piece on it.”

The initial version of HB 3 included money for districts that wanted to rate their teachers and provide the top-rated ones with more money, modeled on a Dallas ISD program that Republican Gov. Greg Abbott has touted.

“The language we ended up with to some degree could have been construed as tied to [the state’s standardized test] and created a little bit too much authority as we went forward,” Huberty said, explaining the change in the bill.

[…]

HB 3 does not include an across-the-board teacher pay raise, with Huberty and Republican House Speaker Dennis Bonnen arguing school districts should instead have local control to decide how to use additional funding. The Senate already unanimously passed Senate Bill 3, which would put $4 billion toward $5,000 raises for full-time classroom teachers and librarians.

Educators and advocates have appeared divided in their support for the two bills, which will need to be reconciled in some form later this session.

See here, here, and here for some background. Now is when the real sausage-making begins, as everyone agrees that Something Must Be Done, but views differ from there. The most likely scenario is that something gets hammered out in a conference committee in the very last days of the session. It’s hard to say at this point which chamber’s bill, or which provisions of each bill, have the advantage. Sometimes it just comes down to who gets on the committee. Expect there to be a bunch of amendments to both bills as they come to their respective floors, which may bring them closer together and may heighten their differences, with the extra joy of shenanigans and other partisan games always in the offing. It’s stuff like this that makes political junkies what they are.

Inevitably, we come back to a sales tax/property tax swap

Mar 20th, 2019
by Charles Kuffner.
1 comment

It’s an idea we just can’t seem to quit.

Texas lawmakers are considering an infusion of $9 billion to improve public schools and lower property taxes over the next two years. The additional $6.3 billion in the classroom is being billed as a transformational effort to better educate the state’s 5.4 million students, while another $2.7 billion would stem the tide of escalating property taxes for homeowners.

“If we’re going to make some strides on these really big items, it really has to happen this session,” said Rep. John Zerwas, R-Richmond, chairman of the influential Appropriations Committee.

While lawmakers are confident the state’s booming economy will provide big bucks to spend on public schools, they are also pitching a number of plans to increase the state sales tax in the future. The proposals include hiking taxes on items such as sweet snacks, gasoline, e-cigarette fluid and heavy machinery rentals. But the proposal with the most apparent momentum is a tax swap that would allow local governments to charge a higher sales tax in exchange for reducing property tax levies.

Even raising the sales tax by one percent “contributes a lot of money” that school districts, cities and counties could use to offset reductions in property tax revenue, Zerwas said. Some estimates predict such an increase would raise more than $5 billion a year. The statewide sales tax rate is now 6.25 percent a year. Local governments can add up to two percent.

Although Republicans are leading the charge with major tax swap proposals, it’s unclear how they will fare in the GOP-led House and Senate, particularly among lawmakers who narrowly won their reelections as Texas Democrats gain ground.

Financial implications of the bills are shaky. Several tax bills were filed a week ago, just under a deadline, and have yet to be analyzed by the Legislative Budget Board which predicts financial effects.

Increasing reliance on the sales tax troubles Eva DeLuna Castro, a budget and policy expert with the left-leaning Center for Public Policy Priorities. Not only is a sales tax considered regressive for taking more money from low-income people than the rich, but its collections are more susceptible to the ups and downs of the economy, she said.

“You need to find a revenue source that doesn’t all the sudden tank on you. Or if you know that it is going to do that, you need to put most of it away for a rainy day and use it when that rainy day comes,” she said.

[…]

Rep. Drew Springer, R-Muenster, is proposing Texas increase taxes on gasoline and close tax exemptions on items like ice cream, certain baked goods, e-cigarette vapor fluid and over-the-counter medicine.

“I don’t think people realize their ibuprofen is tax-free,” said Springer. In exchange, House Bill 2915 would allow the state to lower the maintenance and operations property tax that funds schools. His bill would also increase the homestead exemption to 50 percent of a home’s value. Texans in a home valued at $274,000 would average $1,400 a year in property tax relief, he said, amounting to $6.2 billion less in property tax collections statewide.

Another bill, House Joint Resolution 3, proposes inching up the sales tax and using money from that increase exclusively for public schools. The resolution is proposed by Rep. Dan Huberty, R-Houston, the architect of the House’s $9 billion school finance plan. The measure would require a vote in November to change the state Constitution and increase the statewide sales tax, which is now 6.25 percent. Huberty emphasized that raising the sales tax is just one measure under consideration, and that it’s still too early to pencil in numbers.

“We have to put more money into the system. It’s our responsibility,” Huberty said Thursday at an event hosted by the Texas Tribune.

Rep. Chris Turner, D-Grand Prairie is proposing the state systematically examine each tax exemption every six years to decide whether it is needed. House Bill 3968 will raise revenue by expiring out-of-date tax “loopholes” over time, he said, and is a good alternative to raising sales taxes.

“It is important to note that Texas already has a high sales tax — 8.25 percent in most areas,” said Turner, who chairs the House Democratic Caucus. “The lower someone’s income, the more it hurts, so an increase in the sales tax will hurt a lot of Texas families.”

This comes up every few years – in 2005, in 2007, in the 2012 and 2014 elections – and each time we confront the fact that swapping property taxes for sales taxes greatly benefits property owners while burdening lower income folks the most. That’s a feature and not a bug, as far as its Republican advocates are concerned. I appreciate that at least this time it’s being proposed in the context of putting more money into schools, which would then have the effect of easing the pressure on local property taxes, but the same problem remains. Rep. Turner’s proposal to evaluate tax breaks also comes up whenever sales-tax-increase bills are filed, and it usually gets quietly ignored as the higher-profile swap bills eventually die. It’s still a good idea, it just never gets any momentum behind it. Rep. Springer’s idea to expand the sales tax to more things also comes up in conjunction with swap bills, and there is merit to this approach as well, though the real money is in taxing services, which is pretty much as big a taboo as an income tax is.

To review: I support requiring a process to scrutinize and sunset every tax break we have on the books, and I support at least exploring the imposition of a sales tax on selected goods and services where it is not currently imposed. If the goal of that is to put more state money into public education, and one result is that it allows local governments to ease up on property tax collections because they are no longer trying to make up for the state’s inadequacies, I would consider that a good outcome. The Trib has more.

House passes its budget out of committee

Mar 19th, 2019
by Charles Kuffner.
Comments are off for this post

On to the full House, then the real fight occurs.

A panel of House budget writers gave initial approval Monday to a budget that would spend $115 billion in state funds, including a $9 billion infusion of new funds for Texas public schools and property tax relief.

Now that the House Appropriations Committee has approved the 2020-21 spending plan, House Bill 1, the legislation moves to the floor of the 150-member House.

[…]

Among the highlights of the House’s spending plan are:

$9 billion in new state funding for K-12 education and property tax relief, contingent on lawmakers passing reforms to the way the state funds public schools. The budget does not dictate the breakdown of those funds, but a bill backed by Speaker Dennis Bonnen would give about $6 billion to school districts and use the remaining $3 billion to pay for a reduction in local school district property taxes.

A $2.8 billion increase in state and federal funds for health and human services above what the House proposed in January. That includes a $25 million increase for early childhood intervention services, $6.7 million to reduce caseloads for Adult Protective Services workers, $31 million to expand capacity at local mental health clinics for low-income Texans and $87 million to raise the pay of personal attendants, who care for the elderly and disabled, by about 10 cents an hour.

A $168 million expenditure to give some Texas prison guards and parole officers a pay raise.

Rep. Matt Schaefer was the lone No vote in committee, so presume that this will get some pushback from the wingnuts. The story notes that the House budget draws $2 billion from the Rainy Day Fund, but it doesn’t specify what it’s used for. There’s more here on the House school finance proposal. The budget is the one thing the Lege absolutely has to do. With some cracks beneath the surface on other “priority” items, it’s nice to see this get a head start.

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