Testimony to House Ways and Means Committee Against SB 10 (89(2))

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Every Texan is an independent research organization that, for 40 years, has advocated for public policy for better access to quality health care, food security, education, fairer taxation and good jobs for all Texans. We oppose SB 10, which would decrease the voter-approval tax rate for many cities and counties to 2.5%.

We appreciate the need to properly balance tax rates for Texans while preserving revenue for local governments. Yet given the numerous efforts in recent sessions to reduce Texans’ property taxes, we believe this issue would best be addressed in the next regular session, when members and stakeholders have more time to review data and discuss options with constituents.

Simply put, this is a local control issue. This bill continues to chip away at local governments’ authority to set their own tax rates and budgets. Local tax revenue pays for public services that local governments can best provide. It supplies resources for the on-the-ground services we all rely on, including our roads, parks, police, fire and EMS. We share the benefits of those services, and we also share the cost.

To serve constituents, local government officials must have the flexibility to respond to their communities’ needs. They hear from their constituents when potholes aren’t filled and when trash isn’t picked up. Like you, they have to do the job that Texans elect them to do – and, like you, they need tax revenue to do it.

One local government responsibility of special note: recovery and rebuilding from disasters. Disaster recovery is a costly yet vital responsibility of local governments, and governments must have the cash flow to pay first responders and other up-front costs without waiting for reimbursement from FEMA. Local officials must be empowered to make these hard decisions and supported in explaining them to their communities. 

Yet, local governments are being squeezed by higher costs. Local revenue needs are rising because costs are increasing. In particular, the prices for many of the goods and services purchased by local governments have increased more than general inflation: construction costs, equipment and facility maintenance costs, infrastructure, electricity, public transportation, health insurance, wages, and more.

If local governments cannot set their own property tax rates, they will have to obtain revenue in other ways. That might include an increase in the sales tax or an increase in fines and fees, both of which hit low-income residents the hardest. Or, state lawmakers should be prepared to assist with more of local government needs and ease unfunded mandates.

The Legislature might consider including factors for inflation and population growth when calculating the voter-approval rate. The Legislative Budget Board does this, for example, when setting the state budget’s consolidated GR spending limit each biennium. Taken together, inflation and population growth can increase local governments’ costs well over 2.5% per year – simply to provide current services. 

Inflation alone is currently between 2.5% and 3%. We know from experience that in an economic crisis, that rate can jump quickly. And, as noted above, many goods and services purchased by local governments have already increased more than the rate of general price inflation.

At the same time, many Texas cities and counties continue to experience significant population growth. According to the Census Bureau, Houston, San Antonio, and Fort Worth all ranked in the nation’s top five for numerical growth in 2024, while 7 of the top 15 U.S. cities by percentage growth are in suburban and exurban Texas. Also that year, Kaufman County grew by 6%, Montgomery County by 4.8% and Ellis County by 4.1%. Among cities with populations over 75,000, which would be impacted specifically by this bill, 24 Texas cities saw 2% or more growth from 2023 to 2024.

Texas Cities Over 75,000 Population With Highest Percentage Growth (2023-24)

Source: U.S. Census Bureau, Population Estimates Program.

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