89 TH A NNUAL W EST T EXAS C OUNTY J UDGES AND C OMMISSIONERS A SSOCIATION C ONFERENCE Friday, April 27, 2018 9:30 – 10:20 a.m. “3.003 Lawmaking: Legislative Update” Mr. Jim Allison General Counsel County Judges and Commissioners Association of Texas
4/11/2018 Local Decision‐Making and Property Taxes March 2018 Prepar by: Texas Conference of Urban Counties, County Judges & Commissioners A ciation of Texas, xas A ciatio Coun Texas ssociati of School Boards and Texa unicipal ague Texas relies on property Pr op erty Tax (14 th ) Sal e s Tax (10 th ) taxes and sales taxes to fund state and local Income Tax government. (N/A) State The Majority of Property Taxes Fund Public Schools Speci Growth of the Property Tax by Taxing Unit Type al 30 Di… 25 County School 20 DOLLARS (IN BILLIONS) 15 District 17% 10 … 5 2008 2009 2010 2011 2012 2013 2014 2015 City - Special Purpose District Levy 4,952,7 5,133,8 5,392,5 4,926,0 5,543,4 5,529,4 6,370,4 6,954,1 … County Levy 6,342,7 6,526,7 6,567,0 6,742,9 7,064,6 7,537,7 8,114,9 8,696,3 City Levy 6,451,0 6,593,7 6,755,4 6,810,0 7,054,9 7,324,4 7,828,5 8,380,4 School Levy 21,233, 21,780, 21,558, 22,001, 23,072, 24,854, 26,792, 28,176, Source: Texas Comptroller of Public Accounts, 2015 property Tax Levies 3 1
4/11/2018 The Texas Public schools are funded through: Legislature’s method of funding schools • State General Revenue Fund and its passage of • Local Property Taxes unfunded mandates • Federal Funds increases the property tax burden on local taxpayers. 4 Higher school taxes because of Student Funding property value growth benefit Local Aid per Student State Aid per Student the State’s general revenue Federal Aid per Student fund, not school districts. 60% PERCENTAGE SPLIT 50% 40% 30% • School districts are held to a 20% 10% certain amount of funding per 0% pupil. When property tax 200 200 201 201 201 201 201 201 201 201 revenue increases due to rising 8 9 0 1 2 3 4 5 6 7 property values, the State does Local Aid per 45% 43% 46% 44% 46% 48% 49% 50% 49% 52% not increase per‐pupil funding. Student Instead, the State lowers its State Aid per 45% 44% 38% 40% 43% 41% 41% 39% 41% 38% percentage of total school Student funding. Federal Aid per 10% 14% 16% 16% 11% 11% 10% 10% 10% 10% Student FISCAL YEAR 5 Foundation School Program: The State Share is Falling History 1985‐2016 (2017‐2019 estimated by LBB) 35 30 25 20 Billions of Dollars 15 10 5 0 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 * 2018 * 2019 * Fiscal Year State FSP Spending Local FSP Spending *Data for FY17-FY19 are estimated Source: Direct from LBB, General Appropriations Act, Texas Education Agency 6 2
4/11/2018 Had the State increased Since 2015, the Texas Legislature its share to be a 50/50 increased school funding from partner in funding local property taxes schools for 2016 – 2019, local school property $14.35 Billion taxes could have been reduced by more than $17 billion – an while state funding increased average of 15% $2.17 Billion each year . Source: Legislative Budget Board 7 If the State of Texas doesn’t assume its share, the problem will only get worse. Student Projected Student Enrollment (2015): Enrollment (2019): 4,852,600 5,166,298 Source: General Appropriations Act FY ‘18 – FY 8 ‘19 General Appropriations Act FY18‐19 The legislature reduced the State’s share of public education funding. The budget that the legislature passed counts on over 14% increase in local property taxes over the FY ‘18‐’19 tax years. 9 3
4/11/2018 General Appropriations Act FY18‐19 10 More State Investment • Surging property taxes are directly linked to the state’s school finance system. in Public • The state’s dependence on local Education property taxes is enormous and clear, while school districts costs continue to increase with 60% of Will Lower students who are economically disadvantaged, and 20% that are English Language Learners. Property • Two ways of reducing local Taxes property taxes: 1. Increase state investment; and 2. Pass legislation so that school districts are not penalized for lowering tax rates. 11 Local governments, and property Unfunded taxpayers by extension, face Mandate billions of dollars of unfunded and underfunded mandates from both the federal and state An unfunded mandate is a state law or regulation that governments. requires a local government to perform certain actions, with no money provided for fulfilling the requirements. 12 4
4/11/2018 Unfunded • To shore up the lack of state funding for highways, cities and Mandate: counties must pay hundreds of millions of dollars each year to Reverse TxDOT as “local Intergovernmental participation” on state highway projects. Aid • To fund more than 50% of the state Comptroller’s office, cities pay a hefty 2% fee for administration of local sales tax. 13 • Each year, county and city court staff collect and Unfunded transfer to the state hundreds of millions in Mandates state fees. Those fees are not used by the state to fund the state justice system. • Further, the state demands all of its fees before counties and cities can keep any fines. 14 Unfunded County officials rely almost Mandates exclusively on property tax revenue to efficiently fund the state’s criminal justice system, critical community health initiatives, and other statewide programs that are passed down to local counties by state officials. 15 5
4/11/2018 Unfunded Mandate – Indigent Defense Texas Indigent Defense Expenditures by Fiscal Year in Millions of Dollars Source: Texas Indigent Defense Commission $300 Millions of Dollars $250 $179 $190 $185 $208 $216 $200 $144 $153 $159 $167 $165 $150 $107 $118 $127 $126 $135 $100 $50 $91 $0 $7 $12 $12 $14 $14 $18 $22 $28 $28 $34 $28 $27 $45 $30 $32 $0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Fiscal Year State Reimbursements County Unreimbursed Expenditures 16 Unfunded Mandate: State Inmates in County Jails Convicts ready to be sent to state prison can be left in In 2017, this increased local county jails for up to 45 property taxes by more days without than $58.6 million reim C b o ur se m en j t a b il y s t a h r e e state u n ty required to hold state In 2017, this parolees awaiting increased local hearings for technical property taxes by violations – more more than $47.5 than 2100 on an million average day 17 • The Texas Legislature since 1984 has not updated the transportation allotment, a major contributing cost factor to a school district’s local Unfunded taxpayers. Mandates • A recently approved law for teacher retirement requires both teachers and school districts to contribute a higher percentage into the Teacher Retirement System than the percent contributed by the state. • Mandatory state assessments costs taxpayers millions as teachers’ workloads are increased and additional staff are hired to administer exams. 18 6
4/11/2018 Local Decision‐Making Local • Cities, counties, and school Government boards know the values of their community and are the s in Texas governments closest to the people. • The state created cities, Lead the counties, and school boards to permit citizens to make local Way decisions. • The locally elected leaders of cities, counties, and school boards decide how to provide appropriate services for the people who live in their communities. 20 What Do Local Governments Do? COMMUNITY ELECTIONS TRANSPORTATION OVERSIGHT We ensure your voice is heard EMERGENCY We connect communities We provide essential services Voter Registration Local, State, National Elections PUBLIC Roads, Bridges, and Highways MANAGEMENT Births, Deaths, Marriages, Divorces, Deeds, Housing, Economic Development, Land Use SCHOOLS epare, Prevent, Plan, Respond and Planning, Tax Assessment & Collection We are the first responders Pr Recover We educate the future 5.4 million students adding an additional 80,000 a year INFRASTRUCTURE PUBLIC HEALTH COURTS We support community growth SAFETY We work to strengthen Utilities, Ports, Airports, and protect families We oversee justice Parks, and Libraries We keep communities secure Public Health, Solid Waste, Courts, District Attorneys, Public Medical Examiner, Immunizations, Defenders, Indigent Defense, Probation, Fire Protection, EMS Veterans Services, and Social Court Clerks, Juvenile Services Law Enforcement, Jails and Justice of the Services Peace 7
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