87th LegislatureState HouseTaxes & SpendingPandemic Tax Increase Restrictions, Disaster Loophole Recourse Within State COVID-19 Bill

Use of the property tax disaster loophole could be restricted under a new Texas House bill that aims to curb tax increases during a pandemic.
February 26, 2021
Property taxes and their limits are once again in flux this year, but House Bill (HB) 3 by Rep. Dustin Burrows (R-Lubbock) may provide recourse against localities that raise taxes during a pandemic.

“[T]he governing body of a county or municipality,” that has closed businesses in response to a pandemic, the bill reads, “may not adopt an ad valorem tax rate for the current tax year that exceeds the lesser of the county’s or municipality’s no-new-revenue tax rate or voter-approval tax rate for that tax year.”

It places discretionary power in the hands of the governor who may “issu[e] a written determination finding that the presiding officer” of a city or county government closed private businesses.

After that determination, the locality in question would then be forced to adopt the no-new-revenue rate for that tax year.

Burrows told The Texan, “If you close down commerce, you shouldn’t be able to turn around and raise taxes. I filed HB 3 to prevent that from occurring.”

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“Simply put, it would require shut down jurisdictions to adopt the no new revenue rate, which will provide meaningful property tax protections for all Texans.”

Directly, the bill is aimed at punishing localities that restrict regular operations of businesses during a pandemic — and precluding them from raising taxes during such arduous economic circumstances as experienced this past year.

While rather narrowly tailored to the conditions of 2020 and beyond, it could also be indirectly used to prevent uses of the property tax disaster loophole within Senate Bill (SB) 2 under such circumstances.

Texas has now been under a statewide disaster order for nearly one continuous year, and for the past two weeks has been under two separate orders after Governor Greg Abbott’s winter weather disaster declaration on February 12.

Both the COVID-19 and winter weather statewide orders trigger a loophole in 2019’s SB 2 which increases the threshold on non-voter approved property tax increases back to the previous 8 percent limit.

Under SB 2’s provisions, that limit was decreased to 3.5 percent.

But last year when Abbott declared a statewide disaster for the pandemic, he also inadvertently triggered the loophole giving cities and counties the leeway they sought to apply another tax increase up to the previous limit. Except this time, unlike in 2019 when many slid in one last tax hike before SB 2 took effect, the economy was not roaring and unemployment had skyrocketed.

State leaders objected to the application of the loophole as it pertains to the pandemic, arguing that the loophole applied only to physical and not economic damage. While when the bill was passed the legislature had disasters in mind like that of Hurricane Harvey which were more regionally limited, the provision does not draw a distinction.

Some localities took advantage of the loophole, such as the City of Houston, while others, like the City of Dallas, demurred.

Two legislators, Burrows and Sen. Paul Bettencourt (R-Houston) — the chief architects and carriers of SB 2 — dug in staunch opposition to what they saw as a misapplication of the bill.

Bettencourt told The Texan that the HB 3 section could be used to indirectly close the loophole.

“If judges or mayors shut down businesses, they should not be able to raise taxes. And regardless, the loophole needs closed. It’s unacceptable.”

While not all localities that closed businesses utilized the loophole, each one that took advantage of it closed private businesses to some degree.

Adding that he intends on advancing some legislation to more directly close the loophole, Bettencourt added, “These liberal blueberries need their butts busted for doing this to people during these times.”


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Brad Johnson

Brad Johnson is a senior reporter for The Texan and an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.