In a misguided attempt at tax relief, the Texas Legislature is moving to impose dramatically low revenue caps on cities. State legislators are advancing House Bill 2 and Senate Bill 2 to impose a 2.5 percent cap on annual property tax increases.
If a city were to increase taxes more than 2.5 percent, an automatic rollback election would occur in November. If the increase weren’t approved in the election, the budget would return to the rate set one year earlier — a risk no city could afford to take.
This “cap” would make it impossible for cities and counties to maintain existing services. Items such as additional police officers or street maintenance, so badly needed in a tourist destination like Galveston, will become an unaffordable luxury.
Tourism, the lifeblood of Galveston Island’s economy, significantly contributes to the state’s economy as well. Galveston is home to a population of just over 50,000 residents at night, but wakes up in the morning to an average population double that amount due largely to a flourishing tourism industry.
Galveston hosts 7 million tourists a year, and is home to the fourth largest cruise line port in the nation. But tourists don’t pay property tax to the city.
We cannot manage tourism without being able to provide basic services.
According to the city’s fiscal year 2019 adopted budget, public safety (including police and emergency management services) and infrastructure (streets maintenance, traffic, and drainage services) amounts to 73 percent of the general fund budget. These general-fund supported city services are essential for our residents, but are severely impacted by the millions of tourists who visit our city each year.
If the legislature insists on imposing revenue caps, it must allow exemptions for public safety, roads and other basic priorities that the city and state share. HB2 and SB2 have no such exclusions. Just in Galveston, these bills would create budget deficits impossible to absorb without public safety cuts.
Had a 2.5 percent cap been in effect since Hurricane Ike, the current year’s revenue loss would have translated into over $4 million less for police, fire and public safety. Staff reductions would be a certainty, including reductions in police and fire.
There would be $1 million less for street, drainage and infrastructure maintenance and improvements, and $1.6 million less for code enforcement, general government, parks and critical functions that are fixed in their very nature.
HB2 and SB2 endanger the financial future of our city. The history of Galveston is one of fiscal responsibility. It’s built into our city charter. We don’t need arbitrary restraints created by the legislature and placed on our budget process. Revenue caps are bad for the people of Galveston, especially without exemptions for public safety and other necessities.
Contact your legislators and state leaders. Tell them to oppose tax caps. Or at the very least provide exemptions for public safety and basic needs.