Creative public financing may soon be more important than ever

There is likely not a county or municipal official in Texas unaware of the debate underway in Austin related to state efforts to cap local government entities’ abilities to raise revenues they need to meet constituent demands. It’s too early to say what the legislative outcome is going to be.

The proposal before the legislature would limit how much property taxes could increase to 2.5 percent. If local officials want to raise them higher than that in a given year, the proposal would have to be put before voters for consideration. Existing law already calls for such a vote if proposed property taxes reflect an increase of 8 percent.

Issue is far from mundane

From a political perspective, this is hardly a routine matter of debate. The governor and the legislature cast the issue in the context of tax relief – an understandably winning proposition for elected officials at their level. They position the issue as one of enhancing direct democracy by voters. According to many local officials, however, the legislation represents a direct threat on their ability to meet the basic needs they were elected to deliver.

Indeed, the Legislative Budget Board estimates the measure as written will reduce local government funds by $900 million.

Local leaders say that without that money and with restricted flexibility in designing and implementing workable policies, quality of life in communities across the state will suffer. In the eyes of one Burly County judge, the legislation amounts to the state undercutting local leaders’ effectiveness while failing to commit state money to cover the gap.

In testimony before the Senate Property Tax Committee, he observed that unfunded mandates from the state, such as providing for indigent care and indigent defense, already force local officials to scramble for resources. He said further capping local leaders’ abilities to manage property taxes means things will get worse and that local officials will be the ones blamed.

Meanwhile, taxpayers who are unhappy with the current structure of things made it equally clear before the committee that they’re tired of what one described as local officials’ “whining and crying.”

How this issue is going to play out is anyone’s guess. What is clear is that what may have worked in the past may not work so well in the future. So, working with counsel dedicated to crafting creative solutions will be essential.