News Flash

Happening in Missouri City

Posted on: February 8, 2019

MCTX FAQ: Texas Property Tax Reform and Relief Act of 2019

Happening

On Thursday, Jan. 31, State leaders in the Capital introduced legislation that would require voters’ approval of any local property tax increase of more than 2.5 percent for cities, counties, school districts and other governmental bodies before it could take effect.

Current rollback rates are set at 8 percent and local officials contend the proposed low revenue cap would impede their ability to balance their budgets.

Missouri City officials and their counterparts across the region are closely monitoring the progression of this legislation that is the first major joint bill presented in the 86th Session. It is being supported by the Governor’s Office and the leaders of both legislative chambers.

“Missouri City is carefully tracking this 2.5 percent rate proposal,” said City Manager Anthony J. Snipes. “If passed, the cap would impact our 2020 fiscal year budget and beyond in several critical areas, including public safety, infrastructure, personnel costs, and our fund balance reserves.”

Snipes added that: “Missouri City and cities throughout the State are striving to keep local decisions local. Restricting the City’s ability to raise funds will not provide taxpayers with relief—it will reduce City services because limiting the City’s ability to maintain or raise revenue would strip local officials of their ability to respond to local issues and citizen priorities.”

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Here are some questions and answers to update residents on the topic:

Who are the House and Senate sponsors?

The legislative sponsors of the property tax reform bills are State Sen. Paul Bettencourt (R-Houston)—S.B.2—http://bit.ly/2UGlnXW and Rep. Dustin Burrows (R-Lubbock)—H.B.2—http://bit.ly/2GdL7aM.

What does the legislation do?

In a legislative summary, the Texas Municipal League (TML) provided the following recap, outlining that the bills would:

  • Lower the rollback rate from 8 to 2.5 percent for cities with combined annual property and sales tax revenue of $15 million or more. (Cities that bring in less than the combined $15 million in property tax and sales tax revenue keep an 8 percent rollback rate.)
  • Require a mandatory election on the November uniform election date for all cities that exceed the rollback rate, whether that rate is 2.5 percent or 8 percent. (Instead of a citizen-initiated election as provided in current law.)
  • Provide no carve-out for police, fire or other services. (The bills would make certain concessions for disaster areas.)

What problem is the Texas Legislature trying to solve?

Members have stated that the appraisal system is broken and that S.B.2 and similar bills will reduce the property tax burden on homeowners and businesses. The revenue cap portion of the bill does not address the appraisal system issues.

What local governmental entity in Missouri City receives the most funding in property taxes?

School districts; 53 percent of the taxes collected in Missouri City are allocated to the school district. School districts have been forced to raise more funding through property taxes to make up for the funding that the state has refused to provide.

Do cities receive state funding?

Generally, no. Cities primarily receive funding from sales taxes and property taxes.

What type of property tax relief has been proposed?

S.B. 2 would reduce the total revenue cap from 8 percent to 2.5 percent regardless of the growth of the City or service demands locally. Increases above the state-mandated cap would have to be voted on, at taxpayer expense, by taxpayers voting in an election.

What percentage of Missouri City’s budget is paid for by property taxes?

59 percent of the City’s operating budget consists of property tax revenue. Of that amount, 74 percent consists of residential property tax revenue (based on net assessed value). A reduction in the City’s ability to maintain or raise property tax revenue equates to a reduction in the City’s ability to provide services to its constituents.

What do local property taxes pay for in Missouri City?

Local property taxes pay for police services; fire services; local road construction, maintenance, and repair; sidewalk repair; and parks. Approximately 44 percent of the City’s operating budget is used to pay for public safety (police and fire).

Does Missouri City have the ability to utilize all of its sales tax revenue to fund local services?

No. Unlike certain neighboring cities, 50 percent of all sales tax revenue collected in Missouri City goes to the Harris County Metropolitan Transit Authority (METRO).

Has Missouri City been a good steward of taxpayers’ dollars?

Yes. Over the last few years, Missouri City has earned an Aa2 bond rating from Moody’s and an upgraded AA rating from Standard & Poor’s for its financial management.

Would the 2.5 percent cap have an impact on Missouri City’s general fund balance?

Yes. In a recent financial planning analysis, Missouri City was advised that a 2.5 percent rollback rate cap on property tax revenue in the next few years may lead to a deficit in the City’s general fund balance within 5 years.

How much will a 2.5 percent property tax cap save a Missouri City resident on property taxes?

A 2.5 percent property tax cap could save the average City resident who owns a $100,000 home about $16.55 a year, or $1.38 a month (which would only be enough to purchase about 3/4 gallon of gas today). The savings are not substantial, per taxpayer, when viewed in context of what could be lost by all taxpayers in City services.

If an increase in Missouri City property taxes had been capped at 2.5 percent this fiscal year, what would have been the impact on Missouri City?

The total loss in revenue would have been $1,084,404 in this fiscal year. This equates to:

  • 10 less police officers (Missouri City was recently ranked the fifth safest City in Texas with a population over 50,000 by the Home Security Advisor, an online resource website);
  • 2 less telecommunications officers to receive 911 calls;
  • 2 less code enforcement officers (Missouri City has been designated a Platinum “Scenic” City in recent years); and
  • 1 less health inspector.

Will the legislation increase the state’s contribution to public education?

No. Although the State’s failure to properly fund public education has led to the increase in school district taxes, the bill does not require the state to provide additional funding to mitigate the school property tax burden.

Why does this matter to taxpayers?

Legislation that would limit the City’s ability to maintain or raise revenue fails to consider the City’s local needs and market conditions, which would prevent the City from responding to the needs of its residents and businesses.

How can local officials provide input and feedback on the legislation?

Contact your Texas state senator and your Texas state representative. You can find contact information for your Texas state senator and your Texas state representative here: https://fyi.capitol.texas.gov/Home.aspx.

For updates on the “Show Me City”, please watch the City website: www.missouricitytx.gov, like us on Facebook—fb/MissouriCityTX, follow us on Twitter, Instagram, Snapchat—@MissouriCityTX and Nextdoor, watch Missouri City Television (Ch. 16 on Comcast and Ch. 99 on AT&T U-verse) or download the MCTX Mobile app (available for free in Google Play and the Apple app store).

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