The Kyle Report

The Kyle Report

Monday, June 5, 2017

Governor, lieutenant governor could kill Kyle property tax rate cut

The tone of the discussion at the City Council’s May 6 budget workshop indicated many, if not most, of the council members were leaning in the direction of shaving at least a penny off the city’s $.5748 current property tax rate. In fact, one council member proposed the radical idea of taking the tax rate all the way down to the rollback number — i.e., the rate that would produce the same amount of revenue as the General Fund collected this fiscal year.

However, if Lt. Gov. Dan Patrick and his puppet, Gov. Greg Abbott, get their way, it would be irresponsible of the Kyle City Council to even consider a reduction in the property tax rate.

Patrick is trying to convince Abbott to call a special session of the legislature to enact a couple of measures that Patrick rammed through the Senate, but failed to make pass in the House of Representatives in the regular session — misguided regulations concerning public bathrooms, but, more germane to our local situation, laws that would restrict a city’s (but not a school district’s) ability to adjust its own property taxes. Currently, if a taxing authority attempts to increase its property tax rate by 8 percent or more, the voters within that authority can petition for an election that will force the rate back to the rollback number. Patrick wants to reduce that 8 percent number to 5 percent.

The problem with Patrick’s demagoguery here is (1) since it doesn’t apply to school taxes, which accounts for more than 50 percent of a property owner’s annual tax bill, the overall effect on that bill would be negligible if there is any effect at all and (2) it cripples the ability of local communities, especially smaller ones, to react in times of economic downturns and/or unforeseen budget crises. It could cripple a city’s ability to provide for the basic public safety of its citizens during bad economic times. Property tax valuations are a mirror of the current economy; if that economy goes south, property valuations drastically drop as well, which, of course, results in far less revenue a city has to provide basic city services.

It would be irresponsible for any elected city official, at least one who places more emphasis on the long-term interests and needs of his/her constituents than on his/her re-election chances, to recommend a tax cut in the middle of a good economic climate when that same or a future elected official is hamstrung from re-adjusting that rate when the climate turns bad. Especially when the corresponding school district is not similarly restricted and can still jack its rates as much as 8 percent. For some reason, when property owners complain of high tax bills, they always blame the city for the amount, never the real culprit -- the school district.

Kyle has, not that long ago, experienced a significant economic downturn that resulted in a major decrease in property values. It placed the city in a severe financial emergency that could only be and eventually was alleviated by a significant tax rate increase. If such an economic cycle happens again, the city must be allowed to respond accordingly.

Of course, a lot of this is premature. Abbott has yet to decide whether he wants to call a special session. Texas House Speaker Joe Straus successfully killed Patrick’s property tax plan during the regular session and hopefully he can convince Abbott he has the muscle to do the same in a special session as well so therefore it would be a waste of time and taxpayer money to call a special session on this subject.

The City Council is not scheduled to take up the issue of next year’s revenues and spending again until July 29, when City Manager Scott Sellers formally presents his proposed budget. I imagine we’ll know whatever the state decides to do or not do by that time. Regardless of what action the legislature and the governor take, however, a council conversation on this subject will, at least, be a reflection and a test of the council’s long-term vision for the city, or lack of same.

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