May 13, 2022, Number 19


Download the full .pdf version here: TML Legislative Update Number 19


study shows impact of senate bill 2; 2022 property tax picture coming into focus

Over the past few weeks, property owners across the state have been receiving notices of appraised value, and the dramatic increases to property values in most parts of the state are putting the property tax system back under the legislative microscope. As concerns mount over increased values, one recent report on the impact of property tax reform legislation in 2019 may have gotten lost in the shuffle.

Last month, the Texas Taxpayers and Research Association (TTARA) released a report concluding that major property tax reform legislation in 2019, both S.B. 2 and H.B. 3 (the school property tax reform bill) has slowed the growth of property taxes in Texas. According to the report, Texas property tax bills would have been eight percent higher ($6 billion more) in 2021 had it not been for both bills passing in 2019. Since 2019, property taxes as a percent of Texans’ personal income has declined from 4.4 percent to 4.2 percent, and TTARA expects that number to continue to decline due to the reform legislation.

Complicating matters in the short term is the aforementioned property valuation increases across the state. When it comes to tax rates, however, the property tax rate setting system is designed to decrease the no-new-revenue and voter-approval tax rates when appraised values increase, thus also decreasing the tax rate that local governments adopt unless the city chooses to submit certain planned increases to a citizen election. Further, taxable values for residential homesteads can only increase ten percent each year under state law, even if the appraised values increase more significantly, thus limiting the burden that some residential taxpayers shoulder. Other taxpayer protections like city-adopted homestead exemptions and tax freezes help ease the property tax burden on local homeowners.  

As city budgets start to come into focus over the summer, city leaders may be looking for ways to further ease the property tax burden on city taxpayers. Elected city officials should keep in mind that they are the final say in adopting city property tax rates. Many cities have seen increases in sales tax receipts this year with city sales taxes generally being up nearly 21 percent statewide over last year. Additionally, some cities have received federal dollars from the Coronavirus State and Local Fiscal Recovery Fund that can be used to replace lost revenue from the pandemic by being spent on governmental services. These are just some of the factors that local leaders can take into account when looking at their budgets and balancing property tax relief with the need to maintain infrastructure and pay for critical public safety and city services.

Cities are encouraged to begin (or continue) public outreach efforts in their communities to fully gauge public sentiment leading into budget and tax rate adoption season.  As a reminder, the 2022 TML budget and tax rate memos are available on the TML website. Because the tax rate adoption procedure varies depending on the size of the city, two memos are available: one for cities  under 30,000 population, and the other for cities with populations of 30,000 or more.


federal infrastructure bill update

In November 2021, the federal Infrastructure Investment and Jobs Act (IIJA) was signed into law. The IIJA is altogether a $1.2 trillion bill that will invest in the nation’s core infrastructure priorities including roads, bridges, rail, transit, airports, ports, energy transmission, water systems, and broadband.

The League will monitor state and federal agencies and work with the National League of Cities (NLC) to access the latest information relating to the IIJA. We will be providing periodic updates in the Legislative Update on resources for Texas cities on how to access IIJA funding for local infrastructure projects. 

National League of Cities (NLC)

NLC published a two detailed articles highlighting a couple of funding opportunities for cities under the IIJA: The Promoting Resilient Operations for Transformative, Efficient, and Cost-Saving Transportation Grant Program, and the Safe Streets and Roads for All Program. 

U.S. Department of Energy (DOE)

On May 3, DOE published a request for information regarding IIJA-funded formula grants to states to help improve the resilience of their electric grids. This includes total funding of over $30 million to Texas. More information about the grid resilience grant program can be found here.  

U.S. Department of Housing and Urban Development (HUD)

On May 3, HUD provided notice of a proposed six-month waiver of the “Buy America” requirements in the IIJA to allow HUD “sufficient time to solicit information from the public relating to the agency's potential information collection needs and the associated burdens that would be placed on recipients.” Comments on the proposed waiver are due by May 14, 2022. 

The White House

Earlier this week, the White House announced the  creation of the Affordable Connectivity Program to allow certain households to reduce internet service costs by up to $30 per month. In connection with this program, the White House secured commitments from 20 internet service providers to cut prices to consumers and increase speeds. 


house and senate committee interim hearings

The Texas House and Senate Committees are underway studying interim charges outlined by Speaker Phelan and Lt. Governor Dan Patrick.

Below is a full list of committee hearings set to hear certain city-related charges. All hearings will be held at the Texas Capitol unless otherwise indicated. If a committee has newly posted notice and was not included in last week’s edition of the Legislative Update, it is indicated as such.

Senate Finance Committee

The committee will meet on May 17 at 10:00 a.m. to hear invited and public testimony on the following interim charges:

Property Tax Relief: Examine and recommend ways to reduce Texans’ property tax burden. Review and report on proposals to use or dedicate state revenues in excess of the state spending limit to eliminate the school district maintenance and operations property tax.

Tax Exemptions: Examine Texans’ current tax exemptions and report on whether adjustments are merited because of inflation or any other factors.   

Information on the hearing including, how to register and testify at the committee hearing, can be found here.

Senate Business and Commerce Committee

The committee will meet on May 18 at 9:00 a.m. to hear invited and public testimony on the following interim charges:

Cybersecurity: Review current state and federal laws regarding cybersecurity protections and requirements for local governments, state agencies, and critical industries of our state. Make recommendations for legislation to improve resilience and protection against cybersecurity attacks and ensure the privacy protection of the citizens of Texas.

Information on the hearing, including how to register and testify at the committee hearing, can be found here.  

*NEW* Senate Criminal Justice Committee

The committee will meet on May 26 at 10:00 a.m. at the Texas Department of Transportation (TxDOT) Houston District Headquarters to hear invited and public testimony on the following charge:

Automobile Parts Theft (Including Catalytic Converters): Review the effect of House Bill 4110 (87th Legislature), relating to the registration of metal recycling, and related catalytic converter theft legislation passed by the 87th Legislature. Determine what actions are needed to aid law enforcement and stop catalytic converter theft and its related violence.

Information on the hearing, including how to register and testify at the committee hearing, can be found here.  


disclaimer

TML member cities may use the materials herein for any purpose. No other person or entity may reproduce, duplicate, or distribute any part of this document without the written authorization of the Texas Municipal League.