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Living in the Metroplex makes it difficult to get hometown news on a daily basis, so the City of Lewisville is doing its best to keep you informed through several avenues.

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Come back often and find out what’s new in the City of Lewisville.

Message from Mayor Rudy Durham

Topic: Revenue Caps
Post Date:April 09, 2019
Once again, the Texas Legislature is talking a lot about property tax reform during its current session down in Austin. Unfortunately, most of the measures being discussed are attacks on Texas cities that will not deliver on the promise of tax relief.

If adopted, however, many of those measures would make it more difficult for cities to provide vital services to residents. The negative impacts would be more pronounced for cities that have a history of prudent spending and low property taxes, such as Lewisville.

The bills drawing the biggest headlines are SB-2 and HB-2, which started as identical bills and still contain many of the same provisions after some changes. A vote in the House is scheduled this week on HB-2. At the heart of both bills is something called a “revenue cap” that would reduce the state-mandated “rollback rate.”

The rollback rate is the highest increase in property tax revenues that can be approved by a city without a voter option to call an election. Currently, if a city adopts a property tax rate that will produce more than an 8 percent increase of revenue on existing properties, voters can petition for an election to roll back the property tax rate.

Both SB-2 and HB-2 would lower the rollback rate to 2.5 percent.

That figure is an arbitrary and artificial percentage that in no way reflects the actual costs of city services or expected inflationary increases in those costs. In fact, most years the cost to the city for providing existing services increases more than 2.5 percent, to say nothing of new or expanded services. At best, it is just a percentage that a group of politicians thought would sound good to their supporters.

Had there been a 2.5 percent cap during the past five years, Lewisville would have lost about $7 million in property tax revenue. That would have made it impossible to open and operate the new animal shelter, for example. It would have prevented the city from providing performance-based incentives that helped bring Mary Kay and its 500-plus jobs to Lewisville.

It also would have made “pay as you go” financing all but impossible. We were able to build the new animal shelter with cash reserves – no public debt – but would not have been able to do that under a 2.5 percent revenue cap. The result would be fewer facilities and reduced services, or increased public debt.

The real hook here is that it would not have resulted in any real savings for residents. The average homeowner in Lewisville would have saved about $2.66 per month, or $31.87 annually. That doesn’t qualify as “tax relief” in my book.
Lewisville currently has its lowest property tax rate in 30 years (43.6 cents), and one of the lowest property tax rates in North Texas. We have one of the leanest staffs among North Texas cities according to a Dallas Business Journal study, and the lowest cost of service to residents according to a City of Carrollton study.

Those are good things for our residents. But because of those things, a 2.5 percent cap would hurt Lewisville far more than it would a city of the same size that has a higher tax rate. The math is simple – 2.5 percent of our tax revenue is a lot less than 2.5 percent of tax revenue in a city with a 55-cent or 60-cent rate rate, and that would give us a lot less flexibility to absorb cost increases, service improvements, or even pay raises for police officers and firefighters.

Lewisville and other fiscally cautious cities would be punished harshly by a 2.5 percent revenue cap. The result would be reduced services and reduced quality of life for our residents. All to “save” just $2.66 per month.

If there is to be a change in the rollback rate, at the very least it should be to a reasonable number that will not cripple the ability of Texas cities to serve their residents. The proposed 2.5 percent cap would do vast long-term harm.
The answer we hear from supporters of the revenue cap is that increases above 2.5 percent would still be possible with voter approval. The limited truth of that statement is offset by the fact that the election timeline and process set out in both bills is deliberately deigned to make voter approval highly unlikely. That is not coincidence – it is part of a plan to harm Texas cities.

So when you hear state officials tout SB-2 and HB-2 as “property tax relief” for Texans, I hope you will remember that those bills actually are blatant attacks on Lewisville and other Texas cities, with the almost unavoidable result being minimal savings for taxpayers and significant reductions in city services.