This summer, Texas cities will begin maneuvering through their budgets knowing that the state has lessened the revenue they’ve come to expect. The last session resulted in two immediate stoppages: no more revenue from red light cameras and a limit on fees that municipal governments can charge telecommunications companies for using public right of way. Then, in 2021, cities won’t be able to grow property tax revenue collections by more than 3.5 percent without voter approval. This has been written about before locally, but the Texas Tribune’s new urban affairs reporter corralled responses from all major Texas cities and what they’re expecting.
Across the board, municipalities are reporting an immediate hit in a ballpark that ranges from $4 million (Austin) to $27 million (Houston) from the telecom limitations alone. Dallas and Fort Worth expect about $7 million to $8 million less than they received last year. Red-light camera revenue doesn’t seem like it’ll hit the cities as hard—San Antonio and Houston had already outlawed them—but Dallas and Fort Worth each say they’ll lose out on $1 million next year. (The year after, the city projects a loss of $2.4 million, presumably because existing contracts are allowed to expire if they were signed before May.) It’s by no means a huge portion of their general funds, but these captures can help lead to things like police raises and longer hours for libraries.
The real pain comes the following budget cycle, in 2021, when the Lege’s property tax reform begins. Previously, cities didn’t have to go to voters unless they wanted to jump revenue collections by 8 percent. Now, the cap is at 3.5 percent, and all municipalities are going to feel it: Austin is expecting a shortfall of $52.6 million by 2023-2024; San Antonio’s could be as high as $81 million, which is what it estimates it would’ve cost the city if the cap was in effect in the last decade. Dallas says it would’ve been down $25.1 million if the law was in place last September. The law won’t affect tax bills much, just how much the cities can collect.
The five-year forecast that the city’s budget office presented the Council in June is even more grim.Read More