Common Sense For Sun City

The Texas Municipal League was founded as the League of Texas Municipalities in the summer of 1913 by Herman G. James, Director of the Bureau of Municipal Research and Reference at the University of Texas, and Alexander P. Wooldridge,qv then mayor of Austin. The two men invited representatives from all Texas cities to come to Austin for an organizational meeting. Fourteen cities eventually sent representatives. At that first meeting a modest membership fee was approved along with a constitution to govern the association. Maximilian Starcke of Seguin was among the organizers of the league, and served several terms as president. The membership grew quickly, and by 1946 there were 425 member cities. The sole purpose of the organization is to provide services to Texas cities and city officials. League services to its member cities include legal advice and information on municipal legal matters and legislative representation on the state and federal levels. The central office also supplies information and research library facilities; publishes a monthly magazine, Texas Municipalities; sponsors an annual conference and training seminars on municipal issues; and provides professional development of member city officials. The league is financed primarily by annual service charges paid by affiliated cities, but some income is also derived from magazine and bulletin sales and from subsidiary organizations. I trust the Texas Municipal League far more than a group of wacko tax protesters in Sun City, Texas. All Sun City residents should read (and heed) Point 4 below. If this is (fair & balanced) information, so be it.

[x Texas Municipal League]
TAX FREEZES: CITIES SHOULD PROCEED CAUTIOUSLY

A constitutional amendment approved by Texas voters in 2003 (H.J.R. 16), permits cities to freeze property taxes on the homesteads of persons over the age of 65 and disabled persons. The freeze is optional for each city, except that a popular election on the issue is required if the city receives a petition signed by five percent of the registered voters in the city.

Many cities are beginning to feel the pressure brought by advocates of the freeze, including organizations representing the elderly and certain newspapers columnists around the state. According to some of these proponents, the freeze should be enacted immediately, without any further study or deliberation by cities. This is unfortunate. Enacting the freeze without careful consideration is very risky for several reasons:

1. Once enacted, the freeze is permanent. There is no opportunity for the council or the voters to undo it in the future. Hasty action could lead to fiscal regret for years to come.
2. The impact of public school finance reform is an enormous fiscal question mark on the horizon. Talk of reform now includes proposed restrictions on municipal property revenue (see previous articles). Though TML will be fighting any threat to city revenue during a school finance session, it may be wise to wait until the smoke clears before acting on other property tax issues. If a city grants the freeze and the legislature subsequently reduces the authority of cities to raise revenue, the city may find it very difficult or impossible to recover the revenue lost to the freeze.
3. There is no advantage to enacting the freeze now, as opposed to enacting it later in calendar year 2004. A freeze enacted anytime in 2004 does not impact actual taxes paid until 2005. Thus, waiting until after a spring special session on school finance to enact the freeze would confer the same benefit on affected taxpayers as acting right away would, but at much less risk.
4. Whether real tax “relief” is offered by the freeze is questionable. Cities must still levy taxes to pay for public safety, infrastructure, and much more. Any artificial limitation on taxes simply shifts the tax burden from the benefited landowners to other citizens—in this case younger taxpayers.
5. Persons over 65 already enjoy substantial front-end homestead exemptions in many cities, sometimes as much as $100,000. A city feeling pressured to enact the freeze may wish to reexamine the extent to which these optional homestead exemptions are currently offered. Freezing taxes on an already nearly tax-exempt homestead could be a case of gilding the lily.

There is no deadline by which city councils must make a decision on this issue. TML would advise careful consideration before any decision on tax freezes, especially considering the current fiscal situation in our state. City officials with questions about the freeze may call Bennett Sandlin in the TML Legal Department at (512) 231-7400.

© 2004 Texas Municipal League