In his proclamation calling the Texas Legislature back into the First Special Session, Governor Greg Abbott included “legislation reducing the property tax burden on Texans and legislation imposing spending limits on entities authorized to impose property taxes.” By including this, Republican leaders in both the Senate and House of Representatives now have another chance to pass bills that limit local government’s ability to fund needed infrastructure projects.
There are currently more than forty bills filed in both chambers covering a range of topics, but all would restrict the ability of local governmental entities to issue bonds and debt:
One bill would require that bond elections be held only in November, a recurring theme from recent sessions. If this passes, a successful bond election will require 60% of the votes – a big increase over what was required in May bond elections in the past.
Another bill would limit local government debt by prescribing that the maximum annual debt service in any fiscal year on debt payable from property taxes may not exceed 20% of an amount equal to the average of the amount of property tax collections for the three preceding fiscal years. This would restrict local public officials even more.
Yet another bill would prohibit an entity from issuing an anticipation note or certificate of obligation if a bond proposition for the same purpose had failed any time during the preceding five years. Another restriction for local governmental entities.
The only bill set for a committee hearing so far is Senate Bill 9 by Senator Paul Bettencourt, R-Houston, which would lower the threshold for triggering a voter-approved tax rate election in larger cities and counties from 3.5% to 2.5%. This would significantly hamper local government’s ability to issue new debt to be repaid by local property taxes.
The net impact of these bills, if passed and signed by the governor, would be not only a restriction on the issuance of public debt but a wholesale reevaluation of the processes and priorities around building the state’s public infrastructure that these bonds finance – including roads, schools and healthcare facilities.
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