Local Control or Control the Locals?

 The trend in the 85th regular and special sessions was one of centralizing power in Austin


The 85th Legislature may end up being remembered as the most anti-local government legislative session since Reconstruction. A preference for centralized power among some state leaders has been growing for some time, but in mid-March 2017, as the Legislature shifted into gear, the gloves came off.​

“As opposed to the state having to take multiple rifle-shot approaches at overriding local regulations, I think a broad-based law by the state of Texas that says across the board, the state is going to pre-empt local regulations, is a superior approach,” Abbott said during a question-and-answer session at a meeting of the Texas Conservative Coalition Research Institute.

The comments turned a lot of heads among local leaders and set the tone for the rest of the session. Though the governor’s pre-emptive silver bullet never materialized, local decision-making authority was under heavy fire by those in favor of consolidating state power. 

“For the first time, everybody — counties, cities, schools — everybody was getting shot at,” said TAC Executive Director Gene Terry. 

Legislative committees heard bills almost daily that authors advertised as decreasing, reining in or limiting the authority of local governments.

Cities faced restrictions on annexation and an oddly specific call to target local tree ordinances; schools were loaded up with new unfunded mandates; and one proposal seemed to suggest that local officials across the board could face jail time for endorsing a policy that in any way limits federal immigration enforcement. The last one is working its way through the courts now.

From disregarding the input of local law enforcement on a raft of issues and unaddressed concerns county clerks have about the state-run e-filing database, to again short-changing indigent defense funding, failing to reform the Driver Responsibility Program and killing unfunded mandate protections for taxpayers, counties found few bright spots. 

The regular session was not without hope though. 

Perhaps the brightest point was the House’s effort to address mental health reforms, spearheaded by Rep. Four Price (R-Amarillo). County officials provided copious feedback to the House select committee Price chaired during the interim. Many of those recommendations are now law and will improve treatment for mentally ill, both inside and out of the criminal justice system and county jails.

The Cost of Shifting Costs

While some are working to shift the balance of power to the Legislature in Austin, the balance of the costs still flows downhill to locals. 

“They want the authority, but not the responsibility,” TAC Legislative Director Paul Sugg said. Nowhere was this sentiment more clearly expressed than in the fight over the rollback rate and property taxes, according to Sugg. 

The rising cost of property taxes is one of the biggest complaints lawmakers hear about from their constituents, and the Legislature’s focus on them during the regular and special sessions was intense. But the Legislature’s role in property taxation is complicated at best. They have no direct control over rates, but the decisions legislators make can have an outsized effect on taxpayers’ bottom lines. 

The Legislature’s power to lower property taxes is inexorably tied to how the state funds public education. In the recent past, the state-financed more than half of the cost of schools, but that number now hovers in the mid-30 percent range, and property taxes pay for the remainder. 

The Legislature has also increasingly relied on property taxpayers to fund each new mandate counties must carry out. 

During the regular session, the House took up these two important drivers of increasing property tax burdens and looked for ways to increase state funding to public schools, decreasing the reliance on local property taxes to fund public schools and mandates on counties. 

The Senate, where much of the enthusiasm to restrict local decision-making power resides, took a different approach. They proposed cuts to education funding, school vouchers and restricting funding to local governments through budget referendums.

“The Senate has proposed cutting almost $2 billion from public education, while at the same time blaming cities and counties for rising property taxes,” said Sugg in a March 31 episode of the “TAC on the Lege” webcast. “It’s just more pressure put on the property taxpayer by the state to fund public schools, all while blaming cities and counties for rising property tax bills.” 

Fighting Falsehoods with Facts

At TAC’s 2017 Legislative Conference after the contentious session and special session, Sugg said his team saw the clash coming well in advance. They talked extensively about the ups and downs of the sessions during a live taping of “TAC on the Lege” a semi-regular roundtable discussion hosted by TAC’s Legislative Department.

It started in late 2015 when Lt. Gov. Dan Patrick named the Senate Select Committee on Property Tax Reform and Relief, chaired by Sen. Paul Bettencourt (R-Houston). The committee hit the road, holding hearings across the state during 2016. 

“It was a select committee on drumming up taxpayer outrage over property taxes — I don’t think that’s exactly how they titled it, but it was the effect,” said Sugg.

TAC Legislative Liaisons Aurora Flores and Ender Reed attended each of the traveling committee’s hearings. They made notes on the misinformation promoted by some members of the committee. 

“We knew what was coming down the pike and how intense it was going to be,” said Flores. “But it was shocking, at first, I guess — they were using all of these skewed numbers, comparing apples to oranges.”

The truth is that when looking at state and local taxes combined, Texans have the fifth lowest tax burden in the country.

A primary talking point promoted by Bettencourt was that the growth in property taxes far outstripped the growth of Texans’ income, a claim that was not​​​ supported by any facts. The reality is that the two have tracked closely in the last two decades, and personal income has slightly outpaced property tax growth in Texas since 2010. 

Sen. Bettencourt’s attempted comparison and subsequent claim that taxpayers’ bills were growing up to three times faster than their income was not based on sound math. 

Matthew Gardner, a senior fellow at the nonpartisan Institute for Taxation and Economic Policy called Bettencourt’s comparison of the total budget growth to median income “worse than meaningless,” in an interview with Dallas Morning News reporter J. David McSwane.

In tandem with the falsehood about skyrocketing taxes, committee members pointed out that Texans pay some of the highest property taxes in the country. However, they did not provide the context that Texas has no state income tax and has the lowest state taxes in the country. 

The truth is that when looking at state and local taxes combined, Texans have the fifth lowest tax burden in the country. Only residents of Tennessee, Wyoming, South Dakota and Alaska pay fewer state and local taxes than Texas. 

But misleading data and misinformation about taxation repeated by committee members in the hearings, in interviews with the media and online was just the tip of the iceberg. 

“As we sat there — after two or three sessions — Ender and I start talking, and I said ‘Look at these things they’re saying. That’s not true. That’s not true. That’s not true,’” said Flores. They knew they needed to confront the misinformation head-on.

“We put together this myth versus reality document because it just got so aggravating to listen to them say these things that just weren’t true,” she said.

TAC published the “Revenue Caps: Myth vs. Reality” booklet in March 2016. It was made available to county officials and legislators, and it is also online. The booklet covers the myths, misleading numbers and misconceptions about what drives county budget growth and what is truly driving property tax angst — decreased state funding for schools. 

“Revenue Caps: Myth vs. Reality” also proposed solutions beyond school finance reform that would provide reform and relief, including fixing structural problems in the appraisal system to make sure the property tax burden is shared proportionally rather than overburdening small business owners and residential homeowners. But the pleas for sound policy fell largely on deaf ears. Policy prescriptions were decided on in advance of the hearings.

“The testimony that we heard was all about appraisals, but no matter what witnesses got up and talked about — whether it was their appraisal, what they did and didn’t want as far as first responders and law enforcement — the answer to everything was a 4 percent rollback rate.”

Because of a 2015 change in rules that reduced the number of votes needed to bring a bill to the floor in the Senate, Lt. Gov. Dan Patrick was able to align the iron filings quickly in both the regular and special sessions. Each time, the Senate swiftly pushed a 4 percent revenue cap bill through to the House.

On the House side, Rep. Dennis Bonnen (R-Angelton) carried a similar rollback bill, but one that contained key differences, and welcome transparency changes. He routinely emphasized that changing the rollback rate would not offer a single penny of property tax relief; only school finance reform could deliver on that promise. Nonetheless, the rollback bills made it far in the process in both sessions — but not without significant changes. 

As the clock wound down on the special session, the House passed the Senate’s bill, but with Bonnen’s bill language included that set automatic elections at 6 percent for all taxing entities collecting more than $25 million. This meant the House and Senate needed to go to a conference committee to resolve these differences before the bill could make it to the governor’s desk. 

Bonnen said he would not appoint conferees on SB1. He said the bill was a good compromise. The Senate could take it or leave it. They left it.

Mandatory Spending

Nowhere does the logic of restricting local revenue more clearly break down than in pushing a lower rollback rate while simultaneously raising local property taxes through the backdoor mechanism of unfunded mandates. 

Running parallel to the rollback rumble the Senate pushed during the regular session was an effort by the House to rein in the Legislature’s habit of relying on local property taxpayers to pick up the tab on these additional costs the state imposes. 

“During the regular session, county officials and our allies in the House supported a constitutional amendment, HJR 73, that would have prohibited the state from placing mandates on counties and cities unless they sent along the funds to pay for these mandates,” said Sugg.

If fixing school finance was the first prong in the House’s effort to lower property taxes, then House Joint Resolution 73 (HJR 73) by Rep. Dewayne Burns (R-Cleburne) was the second prong of the attack. It passed out of the House overwhelming 127-18 vote, but went unacknowledged by the Senate and never received a committee hearing. 

Victoria County Judge Ben Zeller likened unfunded mandates to the Legislature’s no-limit credit card in an op-ed published during the special session in the Texas Tribune’s TribTalk. In it, Zeller took the Texas Senate to task for its frigid reception of HJR 73

“As a lifelong Republican, I found this particularly puzzling. Limiting unfunded mandates is one of the most popular pieces of the Texas Republican Party platform. In fact, it received support from 96 percent of delegates at our last state convention,” he wrote.

While the Legislature ultimately did not break the cycle of state-mandated spending that puts pressure on local budgets, they did accomplish something unprecedented. Missouri and other states successfully implemented the language of the joint resolution in their constitutions, but it got there through public petition, not the legislative process. HJR 73 is the farthest any legislative body has gone in working to curb its excesses.

“HJR 73’s progress was historic,” said Sugg. “This is the furthest an unfunded mandate bill has made it through the process, and county officials should take pride in that, and continue to advocate for real property tax relief and protections against unfunded mandates.”

Many state leaders advocated centralizing power in Austin during the 85th legislative session, actively working to limit the ability of locally elected officials to serve their citizens.

Keeping County Priorities in the Spotlight

Many state leaders advocated centralizing power in Austin during the 85th legislative session, actively working to limit the ability of locally elected officials to serve their citizens. They argue the state is better suited to make decisions on a wide variety of traditionally local responsibilities, and signs point to this persisting in future sessions. 

“This disturbing trend flies in the face of our state’s structures, traditions, and history,” said Sugg. “It has never been more important for county officials to stand united for responsive, responsible, local representative government.”

According to Sugg, these assaults on our structures and traditions will continue through the interim and into future legislative sessions because it’s currently politically expedient for these state leaders to advocate for centralizing power in Austin — it’s paying dividends to their supporters and benefactors.

“It should trouble anyone who values local control, local government and local decision-making,” he said.

During TAC’s 2017 Legislative Conference in Austin, TAC Legislative Liaison Rick Thompson laid out the next steps officials need to take. He emphasized the need to talk more about how county government works, how it’s funded, the success and the challenges, and the issues like unfunded mandates it faces. He encouraged county officials to continually underscore the importance of preserving decision-making power at the local level.  

“As we go forward and work in the interim, these issues aren’t going away. But we have an opportunity and the momentum that county officials built during the session and special session,” said Thompson. “Get out there and tell the county story. Make this a part of the conversation around the election process. You don’t have to endorse candidates, but bring these issues to them.” 

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