87th LegislatureState SenateTaxes & SpendingTexas Senate Bill Would Tie Property Tax Disaster Loophole to ‘Physical’ Damage, Excluding Pandemic

The pandemic brought to light a loophole in 2019's Senate Bill 2 that legislators are now hoping to close.
March 11, 2021
The loophole in state code that allowed cities and counties to increase property taxes above the new 3.5 percent increase limit would be substantively closed by a new bill filed in the Texas Senate.

State Sen. Paul Bettencourt (R-Houston), the chief architect of 2019’s Senate Bill (SB) 2 that reformed Texas’ property tax code, introduced legislation to tie the disaster loophole to physical property damage — as the legislators had intended when the bill was passed.

A section of SB 2 allotted slack to localities in the case of natural disasters, bearing in mind Hurricane Harvey and its mostly regionally focused devastation. If a city or county is within an area in which a disaster had been declared, they would no longer be tied to the 3.5 percent limit and could increase property taxes up to the old 8 percent limit without voter-approval during that tax year.

But the code has neither a stipulation for a specific kind of disaster or for its scope. And so, when Governor Greg Abbott declared a statewide disaster for the coronavirus, the entire state became subject to the loophole. Some places, like Houston, took advantage of it, while others, like Dallas, declined.

Bettencourt, along with SB 2’s House sponsor Rep. Dustin Burrows (R-Lubbock), mounted staunch opposition to these loophole increases — arguing, chiefly, that the provision applies to physical damage, and not the economic damage caused by the pandemic.

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The two lawmakers suggested a penalty for localities that take advantage of the loophole, but during the interim settled ultimately for concentrating public pressure on local officials to dissuade them from using it.

But this session, the pair has maintained resolve to close the backdoor within their marquee legislation from the last session. Burrows’ House Bill (HB) 3 provides indirect recourse against a locality that uses the loophole, but Bettencourt’s SB 1427 is more direct.

The Houston senator stated of his bill, “The disaster provisions provided for in SB 2 and HB 492 from the 86th session was meant to aid taxing entities when they sustained physical property damage from a disaster like a hurricane, flood, or a tornado.”

“Unfortunately, there were a number of taxing entities that attempted to use the pandemic to increase their taxpayer’s property tax bills at the worst possible time,” he added.

By distinguishing between physical and economic damages, the loophole will be more closely tied to its legislative intent.

But this year even without the continuous pandemic disaster declarations, the loophole would still be triggered by the winter storm that knocked Texas’ lights out during which Governor Abbott also declared a statewide disaster.

However, this bill would prevent another situation unfolding that occurred last year when the northward unemployment rate and across the board strained pocketbooks were met with large property tax increases courtesy of city and county officials.


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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.