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Posted on: March 13, 2019

City opposes revenue cap legislation

The City of Boerne is opposed to proposed SB 2/ HB 2 Property Tax Reform Legislation. The City of Boerne is adamantly opposed to the proposed 2.5 % rollback tax rate cap. The Property Tax Reform Bill will significantly impact the fastest growing cities ability to provide adequate services to keep up with growth. Smaller taxing units which typically charge more in taxes will actually not be affected by this “reform” cap at all. Our City has not raised property taxes in 7 years. However, if this 2.5 rollback cap passes, the City will likely have to start increasing the tax rate every year to make sure the City can keep up with growth.

“Passage of this bill will impact Boerne’s ability to provide essential services to our community. If the City of Boerne is restricted to the 2.5% rollback tax rate amount it will negatively impact this community in a number of ways. For example the cost of hiring and equipping a new police officer position exceeds $80,000, which is about 1% of our existing ad valorem revenue. The city population and related costs of services are growing at a rate that is greater than 6% per year; therefore, it will be extremely challenging to fund essential services, such as public safety, if HB 2 and SB 2 are passed.”— Mayor Mike Schultz

Further explanation as to why we are opposed to the Property Tax Reform Bill SB2/HB2:

  • A 2.5% cap “one size fits all approach” is not wise nor is it fair. Current ad valorem tax rates in Texas cities vary greatly and this measure rewards taxing entities that have in the past already increased their tax rate over those that have held the rate down, like Boerne. Allowing a 2.5% increase of an already higher tax rate vs. that of a more conservative, smaller tax rate is rewarded. For example, Boerne’s current AV Tax rate of $.4720 is 15% below the state average rate of $.5478 for a city our size. Comparing Boerne to a city in the Dallas area which has about the same population and taxable values but a tax rate of $.6990 illustrates this point. The north Texas city collects $3.5m per year, every year, more than Boerne, but it will have the same growth cap of 2.5% as Boerne and a 2.5% increase for each will result in a much larger amount of new tax dollars for the north Texas city.
  • If inflation and expenses related to fast growth outpace 2.5%, a city will need to rely on an election just to maintain current levels of service. Citizens voting for a self-imposed tax increase, potentially every year in fast growing areas, will likely not succeed and if that is the case, city services must be cut back to avoid becoming insolvent including police, fire, parks and library services.
  • A better approach would be to recognize that every taxing entity doesn’t have the same tax rate or face the same challenges from fast paced growth and have a range of allowable increases based on growth rate plus inflation.

Status: The SB2 version has been voted out of committee with changes and is pending in the Senate, the companion HB2 has had a public hearing, but no changes have been made and it remains in the House Ways and Means Committee pending approval to send to the House.

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