August 2, 2025

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Texas bill to rein in property tax increases passes Senate committee

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Texas bill to rein in property tax increases passes Senate committee

A high-priority bill that would put a tighter limit on property tax increases for larger cities and counties advanced out of a Texas Senate committee on Friday.

Bloomberg News

Operating property tax increases for bigger cities and counties in Texas would be subject to a tighter limit under legislation passed by a Senate committee on Friday.

Senate Bill 9, which was sent to the full Senate on a 4-1 vote by the Local Government Committee, would lower the so-called voter-approval tax rate multiplier for maintenance and operations taxes to 2.5% from 3.5%. The lower multiplier would apply to cities and counties with populations of 75,000 or more, which is up from 30,000 in the original bill.  

While several bills seeking to constrain local taxes and bond issues were filed for a 30-day special legislative session that began July 21, SB 9 was flagged as a high-priority measure. 

Bill sponsor Republican State Sen. Paul Bettencourt said that after Texas enacted the current 3.5% limit in 2019, along with a 2.5% limit for public school districts, local government tax levies increased at faster rates than those for schools, eroding the impact of a massive state-funded cut in school property taxes.

“We’re asking you to tighten your belts by that (1%). Why? The taxpayers are being pushed to the brink on taxation,” he said. “The reason why the state has invested $51 billion into buying down the tax rate on schools is because we were pushing taxpayers to the brink.” 

Bettencourt, who noted property taxes from new construction are not subject to the current or proposed limit, released data showing a 2.5% tax rate would have generated nearly $28.2 million less for San Antonio and $47.6 million less for Dallas than the 3.5% rate in fiscal 2024.

While business and taxpayer groups testified in support of the bill, city and county officials said it would harm their financial flexibility and suggested a carve out for public safety spending. 

Dallas City Council Member Cara Mendelsohn said her city is facing an unique situation due to voter approval last November of a proposition requiring at least 50% of annual revenue increases to be earmarked to fund public safety pension, boost police starting pay, and maintain a larger police force of 4,000 full-time officers. 

Bettencourt said lawmakers are aware of Dallas’ situation and are working on ways to address it in the bill. 

Citing the proposition’s expected impact on the city’s fiscal flexibility, Moody’s Ratings revised its outlook on Dallas’ A1 general obligation rating to negative from stable.

Ed Van Eenoo, Austin’s chief financial officer, pushed to keep the 3.5% limit. 

“We have contracts with police officers, firefighters. We have to buy vehicles. We have to put fuel in those vehicles,” he told the committee. “These things go up just the same as they do for your budgets at the state or maybe even your personal budget so the 3.5% gives you that.”

As it faces budget shortfalls, the Austin City Council is considering a tax rate election in November to exceed the 3.5% limit.