AUSTIN - A problem Austin homeowners know all too well is the sting of rising property taxes. It's a problem Governor Greg Abbott (R) wants lawmakers to address during the Special Session.
"Texans need property tax reform right now," Abbott said the day he announced he was calling a Special Session. "I'm calling on the legislature to pass SB 2."
Senate Bill 2 (SB2) by Senator Paul Bettencourt (R-Houston) would reduce the amount cities and counties can increase property taxes from 8 percent to 4 percent. If city and county leaders wanted to raise taxes by more than that they'd have to call an election.
Supporters say it will reform spiraling property taxes but law enforcement and firefighters from across the state spoke against the bill. They argued they're already short staffed because of funding and this would make it worse.
"If that had of happened this year it would have resulted in a $17.4 million impact to our revenue of our general fund revenue," said Ed VanEenoo, Deputy Chief Financial Officer for the City of Austin. "So you have to understand in our general fund, 70 percent of that money goes to fund public safety."
Abbott also has another idea to address taxes; one he presented last session that he's bringing up again.
"I'm calling on the legislature to pass either a law or to amend our constitution to provide that neither state spending nor local spending can exceed the growth in population and inflation," Abbott said.
Population growth is seemingly easy to calculate, but calculating inflation can be more difficult. Economists say that's because the Consumer Price Index (CPI), which is used to measure inflation, doesn't account for productivity.
"The CPI plus population growth constraint precludes the possibility of productivity-oriented public outlays, which are essential for long-term success," said Economist Dr. Ray Perryman in a statement to KVUE News. "Investments in roadways and education systems can greatly enhance productivity and economic growth over time, though they require additional outlays up front. Obviously, the "CPI only" (inflation) approach is even more restrictive."
"It presumes that the current level of spending is adequate, and there is substantial evidence that State and local spending in Texas is failing to meet pressing needs. If that is the case, then any cap will pose difficulties in the process of 'catching up,'" he added.
VanEenoo added while the idea sounds good, it's just not practical.
"That CPI you often hear about, it's generally a basket of consumer goods. So the price of bread and the price of milk. And it goes up every year. The city doesn't buy a lot of bread and milk. What we do is hire people and we have a lot of employee costs," explained VanEenoo.
VanEenoo added employee cost increase faster than the CPI, especially as the cost of health care increases.
Meaning there are more factors lawmakers will have to consider when working to figure out how to give homeowners tax relief.
Dozens of lawmakers argue to really lower property taxes the state has to fix the school finance system. Abbott has added creating a task force to look into that on the special session agenda as well.
The Special Session starts July 18.
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