While the Republican-led Texas legislature urges sweeping changes to state tax laws, rural cities and counties struggling to balance budgets amid rising costs and dwindling tax bases worry some of those changes may cut too deep.
Unlike school districts, which receive billions in state tax funding, city and county governments depend largely on ad valorem (property) taxes to function. Now, lawmakers are proposing a cut to rollback triggers related to effective tax rates, themselves based on cost estimates arrived at during official budgeting processes.
The proposal would drop rollback rates from 8 percent to 2.5 percent, meaning any budget that requires greater than a 2.5 percent effective tax increase will trigger costly rollback elections, as voters go to the polls to approve the increases.
Aside from the election costs, local leaders from both parties say any reduction to the rollback triggers will put undue burdens on rural government to look for cuts in an already-austere environment.
“I have a big concern that the ‘one-size-fits-all’ approach may be catastrophic for some of the smaller taxing units, and that’s where most of my concern, is,” says Nueces County Tax Assessor/Collector Kevin Kieschnick.
He says that larger counties and cities can absorb cuts into an ever-growing tax base. But, Low-tax-base areas will suffer.
And the effects will be tangible. Nueces County Judge Barbara Canales tells 6 Investigates what lawmakers are asking, should the proposed legislation pass into law, is the equivalent of an unfunded mandate – forcing local governments to fund even basic maintenance and operations needs, without the benefit of local control over the budget-setting process.
Canales points to the leaky Nueces County Courthouse building as a prime example.
“Probably nothing illustrates the issue more than water leakage and damage to this building after a torrential rain. Actually, after any rain.”
She says if lawmakers drop the effective tax rate cap, finding the money to make needed repairs will be a challenge, never mind larger ones like rising employee healthcare costs and insurance.
For County Chief Appraiser Ronnie Canales, Austin’s push to lower taxes may come with good intentions, but, the results will put pressure on the entire tax structure as leaders are forced to choose between which essential – and constitutionally-mandated – service to cut, and which to keep whole.
“When (Texas) starts dictating what we can and cannot do, then this is where we have to make a decision as to what service we can – and cannot – give you.”