SB: Local tax limits under SB2 may be holding up coronavirus disaster declaration from Abbott

On a conference call with elected officials, Mrs. T sought to make clear that the stricter tax limitations on cities and counties would be lifted if Abbott issues disaster declarations; Abbott seemed to confirm but said he’d look into the legalities

While local governments around Texas continue to handle the heavy lifting on the frontlines on the response to the coronavirus scare, some are wondering when Gov. Greg Abbott will issue disaster declarations – at least in some targeted areas – to free up resources and provide flexibility needed for this public health crisis. Democratic and Republican governors around the nation seem to have moved more swiftly – and none of them had SXSW or Rodeo Houston canceled in their states.

Just today, Abbott’s office announced he will hold a news conference tomorrow to update the public. Prior to that, he held a conference call this afternoon with elected officials including members of the Texas Legislature, mayors, county judges, and others who were mainly just listening.

Most of what was said covered the same kind of information presented to the Texas House Public Health Committee earlier in the week. But there was at least one emerging point of contention: Tax limitations under Senate Bill 2potentially being lifted in the event of a disaster declaration.

To review, cities and counties now have automatic rollback rates at 2.5 percent following passage of SB2. In addition, hospital districts are now under a hard cap at 8 percent. In the event of a disaster declaration, cities and counties in affected areas go back to 8 percent for the following two years.

Some of those who listened to the conference call this afternoon said Gov. Abbott did not seem at all prepared to answer a question about that topic. It was asked by Public HealthChair Senfronia Thompson, D-Houston.

“I wanted to know whether, under SB2, if the coronavirus caused a state of disaster, would that mean the cities and counties could go back and use the 8 percent rollback rate instead,” Mrs. T told Quorum Report after the call.

By her account and others, Abbott said that he thought she was correct but he would double check the legalities.

Sen. Paul Bettencourt, R-Houston, said hospital districts will bear the brunt of costs associated with a coronavirus pandemic. That being the case, Chair Bettencourt felt the 8 percent rollback for those taxing entities is appropriate. Bettencourt also noted that because there’s been so much negative economic activity prior to the release of appraisal rolls, “we don’t even know what up is yet.”

That’s fair.

But even though the hospital districts are capped at 8 percent, it is worth pointing that that they had much more flexibility prior to the adoption of Senate Bill 2. Before the law was signed by Abbott, hospital districts could exceed 8 percent and not be forced to hold a rollback election unless voters petitioned for one.

Now they face a hard cap at 8 percent regardless of whether a possible pandemic – like the one unfolding now – causes a huge spike in uncompensated care.

Of course, the governor has previously been creative with his use of power in emergencies. The way in which he drafts a possible disaster declaration will matter.

QR readers will recall that Abbott suspended state law in the case of the special election to succeed Rep. Blake Farenthold back in 2018. Then last year Abbott pointed to disaster powers in the wake of Hurricane Harvey as justification for extending the life of a state agency, the Texas State Board of Plumbing Examiners, that had not been extended by the Legislature during the regular session.

By Scott Braddock