Closing the actual property tax catastrophe loophole to extend tax charges is shifting via Texan laws

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Closing the real estate tax disaster loophole to increase tax rates is moving through Texan legislation

A loophole in Senate Act (SB) 2 of 2019 allowed cities and counties across the state to raise property taxes beyond the law’s new limits due to the coronavirus disaster declaration.

But a law was passed this week to fill that void.

SB 1438 and passed the Senate overwhelmingly. House bill (HB) 3376, the identical companion of the house, was dragged to the floor of the house on Wednesday to expedite the process for the Senate version.

Since the realization A year ago the chief architects of SB 2 – Senator Paul Bettencourt (R-Houston) and Rep. Dustin Burrows (R-Lubbock) – pushed back the use by the municipalities.

The loophole was set in law with a view to a disaster like Hurricane Harvey – a regional loophole that would cause physical damage. But the code itself didn’t make that specification.

In the Center of debate is whether, for legislative reasons, the Code only applies to disasters that explicitly cause physical harm, or whether, by simply reading the law, it applies to any disaster declaration – even another economic nature like the COVID-19 pandemic.

The city of Houston accepted the tax hike gap, while Dallas ultimately considered it gave in after public pressure.

Bettencourt’s SB 1438 was approved by the Senate at an accelerated rate earlier this week. It ties the qualification of the gap to the four levels of “qualified property damage” in the country code. The provision provides a specific anchor for deciding who, what and where is eligible for the property tax extension. Under current law, it is largely at the discretion of the localities.

“It was important to link the physical damage to the automatic damage exemptions in the code approved by voters in a recently passed constitutional amendment to positively lock the trigger,” Bettencourt said The Texan.

“Therefore, like a hurricane or other event, the four exceptions to the new level are crucial. These changes prevent it from being at the discretion of a control unit that various cities and counties have exercised such as Houston. “

One modification On the bill submitted by Bettencourt, localities are prohibited from jumping from one disaster to the next for the purposes of the gap in a subsequent year – either for the same or for a different disaster.

The bill also addresses school districts where the loophole currently excludes them. “If a school district needs to spend more money to respond to a disaster,” the language says, a ratifying election is not required for a property tax increase in the year after the disaster. However, the disasters that are expressly excluded are “drought, epidemic or pandemic”.

This also applies to other tax units within the scope of this invoice.

“A pandemic should never be an excuse to raise property taxes, especially beyond voter approval,” Burrows said The Texan.

“While many jurisdictions denied this, some took advantage of a loophole. I am proud to be working with Chairmen Meyer and Bettencourt to legally finalize this for taxpayers. “

No explicit closing of the gap, a Provision inside Burrows’ Disaster Act, HB 3provides recourse to places that use it – specifically, to keep them linked to the new revenue rate in the following year.

The topic was a focus for Republicans under the pink dome for that session.

This must be observed outside of this legislation The winter storm in February, which caused a great deal of physical damage and also led to a national disaster declaration by Governor Greg Abbott, left the same loophole that the pandemic closed a year ago – except this time the physical-economic factor is not qualified.

With the changed language in Bettencourt’s draft law, tax units that used the loophole last year would not be eligible for this year as part of the pandemic or winter storm disaster declaration. But others who couldn’t do so may not have been able to apply this new law as they would be taking advantage of the loophole for the first time.

Bettencourt, Burrows, and others succeeded last year in preventing several places that were considering taking advantage of the loophole from taking it over. But others blew right past that stop sign and could try again with the green light currently required by law.

The passage of this law is intended to prevent as much of this as possible.