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Jun 29

June 29, 2020 TML Coronavirus Update #74

Posted on June 29, 2020 at 4:41 PM by TML Staff

Urgent Updates


Is the governor holding a press conference in North Texas today?


League staff heard a rumor that he might be doing so at 5:00 p.m. today (June 29), but we haven’t been able to confirm and no media is reporting on it as of printing time. If he does hold one, League staff will listen and report on any new city-related developments in tomorrow’s Update.


What are the results of TML’s mid-year Fiscal Conditions Survey?


Each year, TML conducts a fiscal conditions survey of its member cities. With an unexpected public health crisis and an economic recession, most cities will have to make difficult decisions over the next coming months. This is why TML created a special-edition, mid-year fiscal conditions survey to help cities navigate the upcoming budget planning process. With 552 cities responding, the survey demonstrates that the Coronavirus pandemic has impacted cities significantly.


Cities are the government closest to the people and play a significant role in the quality of life and emergency response for communities. Citizens benefit from the core services that cities provide, such as public safety (EMS, fire, and police), streets, parks, public transportation, libraries, utilities, and other vital services. Those services are funded by property taxes and other sources of revenue.


With little financial assistance from the state, cities are tasked to manage growth or decline and rely on their own capacity to generate revenue. The state provides almost no funding for the provision of city services. In fact, Texas ranks 47 out of the 50 states in the amount of state-generated revenue as a percentage of their budgets. In planning its own revenue mix, each city is different and will need to make decisions based upon any number of factors, such as the impact of COVID-19 on other sources of local revenue like sales taxes, the amount of city expenditures made in response to the emergency, as well as the ability and willingness of local taxpayers to potentially pay a given property tax rate.


Survey results show that 67 percent of cities are choosing not to change their property tax rate. Only 14 percent of cities are estimating a raise in their tax rate. Further, over half are projecting to adopt the “no new revenue rate,” which used to be called the “effective rate” prior to Senate Bill 2 from 2019. Of cities that plan to exceed the no new revenue rate, the median increase is projected to be 3.5 percent according to the survey. 


In recent months, cities are not only responding to a public health crisis, but they have taken a financial hit. Sixty-six percent of cities have lost sales tax revenue due to the pandemic. In addition, more than 50 percent have lost hotel occupancy tax revenue, and 48 percent have lost mixed beverage taxes. Of the responding cities, 28 percent expect next year’s revenue to be lower compared to the current year.


To deal with the current revenue loss, cities have examined what cost-saving measures could be implemented. Twenty-five percent of cities imposed a hiring freeze and 15 percent have frozen wages in the current fiscal year. The survey shows that cities will continue to extend their hiring and wage freeze into the next fiscal year. Twenty-three percent of cities either reduced or eliminated city services. However, only 10 percent of cities expect to reduce or eliminate services in the next fiscal year.


Under the CARES Act, the Coronavirus Relief Fund is to be used for state and local governments in response to the pandemic. Twenty-five percent of all cities have received such funds. Sixteen percent of cities that received funds received it directly through the U.S. Treasury Department. Cities in a county of 500,000 or more population were able to receive their money from that county – 29 percent received funds through this avenue. All other cities (except the few with 500,000 or more population that received direct allocation) can draw their funds from the state through the Texas Division of Emergency Management (TDEM), and over half of cities that received funds did so through TDEM.


It is no surprise that Texas and its cities have experienced incredible growth in recent years. Many cities have seen their populations grow by more than 10 percent since 2010, with some experiencing an upwards of 30 percent growth. According to the U.S. Census, Texas has led the nation in annual population growth for each year between 2010 through 2019. Texas cities have felt that impact. For much of the past decade, seven of the fifteen fastest growing cities are located here. Texas surpassed 28 million people in 2017 and is on the verge of surpassing 29 million.


Recent trends have shown populations shifting from rural to urban areas, indicating that cities will experience the majority of the future population growth. The state demographer projects the state’s population will double by 2050. This would mean 25 million more people living in Texas in 30 years. Currently, 74 percent of the Texas population (21.2 million people) live in incorporated areas. Further, 89 percent of Texans (25.6 million people) live in metropolitan statistical areas (MSAs). In other words, the vast majority of Texans live, work, and play in or around cities. In the last five years, we have seen cities taking on more capital spending to address this growth. Now, we are seeing an incline of cities (30 percent) that are expecting to postpone capital spending as a cost saving measure.  


The survey reinforces the notion that no two Texas cities are identical, especially in a crisis. Cities may respond differently to economic conditions and public health emergencies, and that is why the legislature should not impose one-size-fits-all mandates or revenue restrictions on cities. City officials are engaged with residents every day and are the most familiar with local issues. They must have the flexibility to respond to fluctuations in revenue sources and to the different levels of services city taxpayers demand.


The full results of the survey are on TML’s website at:


What is the latest with regard to voting by mail?


Last Friday (June 26), the U.S. Supreme Court refused to hear an appeal that could have expanded voting by mail in Texas. 


The Texas Democratic Party had appealed a U.S. Court of Appeals for the Fifth Circuit’s opinion to the Supreme Court. The Fifth Circuit opinion prevents Texas voters who are afraid of contracting COVID-19 at the polling place from voting by mail solely for that reason. Supporters of voting by mail argued to the Supreme Court that the state statute governing voting by mail violates the U.S. Constitution’s prohibition on discriminatory voting restrictions based on age because it allows older voters to vote by mail, while prohibiting younger ones from doing so.


Justice Sotomayor included the following statement in the court’s refusal:


“This application raises weighty but seemingly novel questions regarding the Twenty-Sixth Amendment. I do not disagree with the decision to refrain from addressing them for the first time here, in the context of an emergency application to vacate a stay of an injunction. But I hope that the Court of Appeals will consider the merits of the legal issues in this case well in advance of the November election.”


The Texas attorney general released this statement:


“’I applaud the Supreme Court for following the law and refusing to order mail-in balloting that the Texas Legislature has forbidden. Universal mail-in ballots, which are notoriously vulnerable to fraud, would only lead to greater election fraud and disenfranchise lawful voters,’ said Attorney General Paxton. ‘State election officials have many options available to safely and securely hold elections without risking widespread fraud. My office will continue to fight for safe, free and fair elections.’”  


Further Updates


How have mayors responded to the rise in COVID-19 cases?


Mayors all over the state are doing what they perceive is right for their community to protect their residents. Two developments are of particular interest.


In central Texas, the City of Round Rock issued an order that becomes effective June 30 and requires individuals 10 years of age or older to wear, with some exceptions, masks: (1) inside any building that is open to the public; and (2) outside with a group of people where it is difficult to keep six feet away from others in the group. The order provides for a verbal or written warning for the first infraction and an escalating monetary penalty for subsequent violations.


In addition, the McAllen Monitor reported on Saturday (June 27) that


The mayors of Hidalgo County’s largest four cities – Jim Darling of McAllen, Dr. Ambrosio Hernandez of Pharr, Richard Molina of Edinburg, and Armando O’Caña of Mission – all signed a letter to the governor outlining their desire for more pandemic autonomy. “Specifically, the mayors petitioned for the ability to create local size restrictions on gatherings and to decide locally whether to enforce mask wearing and how to enforce it, framing those desires against the backdrop of the Rio Grande Valley’s dramatic uptick in COVID-19 cases over the last month.”


What has been the response to the governor’s decision last week to close down bars?


A lawsuit, it looks like. The Texas Bar and Nightclub Alliance plans to sue the State of Texas over the governor’s decision last week to close bars. TBNA’s Facebook page said this:


“In light of Greg Abbott’s irresponsible and shameful actions this morning that shutter the businesses that provide a livelihood for your families and employees, we support our members in the constitutional right to protest by keeping your businesses open.”


In a related issue, the Texas Alcoholic Beverage Commission is allowing mixed-drinks to go in certain circumstances. 


Where can I find archived issues of the TML Coronavirus Updates?


TML Coronavirus Updates are archived by date here and by subject here.